What's Going On?

I'm not totally crazy after all. I'm supposed to have some understanding of how the big pieces of an economy fit together. Now, a former Cabinet Minister of the previous Barbados Labour Party (BLP) was ready to lay into me yesterday because he said my understanding was merely that of an IMF economist. I begged to differ, and he let me keep the BLP pen anyway. A topping gesture.

But, I have been more than a bit bewildered with the comments that I was hearing about developments in the Barbadian economy and what some people dealing with the economy were saying.

The latest data on the economy show that unemployment has risen (10.1% at March, some 2.2 percentage points over the same period in 2008). Retail prices fell by 0.4% in March to bring the annual rate to 6.6%. The combination of rising unemployment and falling prices brings forth an ugly spectre.

With the world in recession and its effects supposedly being felt in Barbados too, I had read some reports that Barbados was weathering the storm and not seeing much of a downturn.How could that be? The broad economic data show, unfortunately, that is not true (see Sunday Sun, June 14, page 17A). It will be useful to see how that unemployment increase is spread across the economy; the natural supposition is that its rising faster in construction and tourism. The loss of spending power of that group of workers has not yet had its main impact on the economy, I suspect, and may be less given some tendency for foreign workers to be important, so the bigger impact may be on their ability to remit funds abroad. That's an odd saving grace for Barbados.

What else is being affected? Take housing. (see Sunday Sun, June 14, page 5A). At last evidence is showing a slow down in that sector. Rents are falling, properties are not moving. Whether foreigners or locals are involved, people now want to get value for money, but people are clearly less willing to pay top dollars or pounds for a property of any sort and some of the inflated prices for luxury properties appear to have burst.The report indicates that prime seafront rentals that could have fetched B$2,200 a month are now down to B$1,500. And for B$1,500 people are seeking the best they can get. Also notable is that properties are remaining unlet for a long time, even about a year, Large properties that made for good executive rentals (perhaps B$10,000 a month) have seen prices slashed (to say B$8,000-7,000). But the lack of rental income will have repercussions, and it will be worth watching the 'for sale' signs. But one immediate repercussion is on jobs for people who provided domestic services for the properties: gardeners are still active, but less so while the houses are unrented; other staff are probably not needed at all unless the properties are occupied.

Another piece of the puzzle is tourism. I must admit that I think the sector has its head in the sand. "Staycation", which now seems to be the word of choice, meaning getting locals to stay in country and enjoy tourism facilities, should always have been a major part of the picture. When you have a clear seasonal pattern to foreign visitors, how could you not make a major effort to fill the gap with locals? I hear that a lot of foreign visitors are repeats, but that suggests to me a static rather than dynamic market. My naive view is that it's better to have 'bums on seats' as the English would say than empty chairs. In other words, do all you can to sell rooms, including to locals. I have a nagging suspicion why local hotels do not do this and it smells of a sort of classism.

The staycation idea, where family stays at home and relaxes at home or takes day trips from their home to area attractions, works better on a small flattish island like Barbados, I think, given that it's no big effort to get from anywhere to one of the luxurious coastal resorts or the few too-few attractive sites that are here. Is is the case that some of the select hotels do not want to be seen as places for locals rather than foreigners? I have heard many unpleasant stories of how other Caribbean nationals have been treated at one of the major hotels when making business trips over several years. I will test this a bit myself with a weekend package at a small west coast hotel.. Admittedly, my treatment may be good as I have a passing acquaintance with a manager, but that may not wash away some general staffing attitudes that come over as a negative experience for other Caricom visitors).

I hope that the release of these new economic statistics start to remove the scales from some people's eyes.