Published: Thursday October 30, 2008
BARBADIANS NEED TO put aside their complacency, face the reality of the global financial crisis and plan for the worst.
This clarion call was made by chairman of the Barbados Private Sector Association, Ben Arrindell yesterday, as he painteda graphic and gloomy picture of what could happen to the economyif the Government, private sector and other stakeholders didn't take stock.
Addressing a full house of participants at the Public/Private Sector Consultation at the Lloyd Erskine Sandiford Centre yesterday, he said "some of you may regard the picture I have painted of the challenges that we face as extremely gloomy. If so, that was deliberate because I believe we need to put aside our complacency, face up to reality, and plan for the worst case scenario".
Arrindell said yesterday's talks not only needed to proactively examine the economic impact of the global crisis, but the social impactas well, particularlyas it related to the disadvantaged.
He said the United Nations Trade And Development Report 2008 had predicted the global financial crisis "could become even more difficult if large movements in the exchange rates of major currencies add to the turmoil in the financial market" – a risk that had increased in the first half of this year.
He said Barbados could, as a result, take its worst hits in construction, tourism and international business, with "a severe slowdown" expected in the construction industry next year because of the cancellation of several projects.
"This in turn could result in large job losses and a falloff in foreign currency earnings," he said.
He added that in tourism, Barbados was likely to experience a reduction in visitor arrivals, and although many visitors had already pre-paid and would come for the winter season,a major decline in bookings was expected for next year.
"I understand from the Barbados Hotel and Tourism Association that bookings for the coming season are currently down by 15 per cent to date and the expectation is that those will reduce to ten per cent per month for the rest of the season," he stated.
He added that those visitors who come would be likely to spend less, particularly those from the United Kingdom which is one of Barbados' main markets and which is being crushed by job losses, a credit squeeze, mortgage foreclosures, investment losses andthe falling value of the pound sterling.
"Being the major driver of the economy, a severe impact on tourism will have a knock-on effect on various other parts of the economy: retail and distribution, particularly for small businesses," he explained.
Arrindell also predicted challenges for international business, noting that this sector would be influenced by the possible election of Barack Obama as US president, and the announcement last week by 17 Organisation for Economic Cooperation and Development (OECD) countries that they would be calling on the OECD to reinvigorate part of its harmful tax intitiative.
Noting there was a lack of public awareness of the potential impact of the global crisis on Barbados, the private sector head called on Government to help the construction industry by accelerating its capital works project with the help of the private sector; and to consider a temporary relaxation of the exchange control policy in relation to the ability of local banks to lend to foreign investors who are investing in large projects here.
Noting that the UN report had advised co-operation among trade unions, employers, governments and central banks in order to prevent a wage inflation spiral, Arrindell described Barbados as "lucky to have the mechanism of the Social Partnership" through which to address these issues.
"I hope we can start to formulate plans for not only lessening the adverse impact of the current crisis on our society, but also to examine ways in which we can work together to create the kind of investment and social climate that will serve to continue to stimulate both foreign direct investment, greater levels of entrepreneurship, creativity and competitiveness within our local business community," he said, calling for high productivity, efficiency, fairness and trust.
Source: Nation Newspapers