Economic Review December 2003

The Barbados economy grew by about 2% for the first nine months of 2003, marking the fifth consecutive quarterly increase in output since emerging from recession in the latter half of 2002. The expansion in real GDP was led by the traded sectors, primarily the tourism and non-sugar agriculture and fishing industries, whilst construction and wholesale and retail trade provided some impetus for the modest improvement in non-traded sector activity. Following below-par growth in the first six months of the year, the net international reserves (NIR) was buttressed by Government’s receipt of divestment proceeds in the third quarter. This inflow boosted bank deposits, which, when coupled with the still weak demand by the non-financial private sector for new commercial bank loans, contributed to the highest level of excess liquidity in the banking system to date. The overall fiscal deficit was smaller than the deficit incurred last year, the combined effect of a moderate increase in tax revenue and lower on-budget capital expenditure.