Bedtime Story For Barbados Investors Smells Of Cow Pasture
The Governor of the Barbados Central Bank tells a wonderful bedtime story, and the very next morning children all over the world happily skip their way to investment firms while singing the latest Sesame Street jingle.
Well, as grandma used to say, “If you are going to tell a fib – tell de big one dat everybody want to believe is de truth”
Doctor Marion Williams, Governor of the Central Bank of Barbados, announces that Barbados’ economy is soaring with a 4.4% expansion in the first 2006 quarter alone and the media around the world parrots her statement without question. MSN Money reports it as fact. So does Business Week, San Francisco Chronicle & Associated Press, CBC, The Nation News, The Barbados Advocate and dozens of other news organizations – who all lend their credibility to Williams’ statements.
It must be true!
Wow! That is seven consecutive quarters of outstanding growth and over a billion dollars increase in just three years. Hang on to your seats children, this Barbados GDP (Gross Domestic Product) rocket is blasting into orbit!
But What Is Responsible For This Happy GDP State of Affairs?
(Besides excellent management by Government and the Central Bank, of course.)
Dr Williams revealed that the economy expanded by 4.4 per cent between January and March this year. She says this was driven by the resurgence in tourism and manufacturing as well as the ongoing construction boom as the country prepares for the 2007 Cricket World Cup.
from Caribbean Net News
So the 2007 Cricket World Cup construction boom is part of this tremendous growth in Barbados GDP. But…. Barbados is borrowing all that money for the construction boom – promising to let the next generation pay it all off, mortgaging the future and even the public highways to private interests.
This purported “Barbados GDP Growth” is not being fuelled by increases in production efficiency or capacity, expanded and new markets, new buyers or the establishment of new businesses attracting new foreign sales and profits.
This claimed GDP growth is fuelled by government spending and borrowed money.
“And dem fake GDP yard fowl numbers will soon come home to roost…” as grandma would say.
Not everyone is buying this bill of goods. Patrick Hoyos of The Broad Street Journal just did an outstanding analysis of Dr. Williams’ statements in his May 8, 2006 article “Through a Glass, Darkly”
Mr. Hoyos chides Dr. Williams – and none too gently either. Some excerpts…
…I never realized we were so industrious. In fact, even when tourism growth declined by 4.2 % last year (CB economic review, Jan. 30, 2006, page 2), our GDP still went up by half a billion dollars. Of course, we know it was all due to construction activity.
Imagine when we start building those flyovers – the GDP may just take off…
…the bank’s “through a glass, darkly” approach to this economy’s outlook concludes with the almost laughable cop-out that “inflation could slow to around 3.5% by the end of the year, provided that international oil prices stabilize –(sorry, I have to pause at the audacity) — as predicted by the International Monetary Fund.
This review was issued on May 2, two weeks after oil prices surged past US$70 a barrel and with almost every serious analyst predicting that it would not take much for oil to go past US$100 per barrel anytime now…. Yes, (oil) could go back to $40 too, but it is at least imprudent to count any of your chickens on that premise. Come on.
…Oh, for clear explanations of simple concepts and proper diagnoses, no matter how unpalatable. It’s getting harder to depend on the rose-coloured views of the Central Bank of Barbados, and that’s a sad day for us.
Well said, Mr. Hoyos. Even if The Nation Newspaper and the Barbados Advocate have lost their sense of smell, the Broad Street Journal seems to know a cow pasture when it smells one.
To Barbados Free Press reader K, who alerted us to Mr. Hoyos’ fine piece. We don’t always have the time to use every tip that K (and others) send us, but we really appreciate the help. It is quite a job to keep this website going as we all have to work real jobs to support ourselves and our little ones…. so keep those tips and photos coming, folks!
Also, we are happy to print articles written by BFP readers. Even if you have never been published before or are unsure of how to proceed, just fire up the email and send us your idea or rough draft. Together, there is nothing that Bajans cannot accomplish – even eventually making our system of government into one that is accountable, transparent and responsible.