Barbados will weather economic storm

Barbados should be able to weather the economic storm triggered by skyrocketing oil prices and the ravages of devastating hurricanes that have struck the Caribbean this year.
That's why when the credit analysts at Standard & Poor's on Wall Street sat down recently in New York and assessed the situation, they didn't touch Barbados' credit rating. Indeed, with the exception of Grenada, whose rating was downgraded twice since Hurricane Ivan devastated the country, the ratings for The Bahamas, Jamaica and Barbados, all of which suffered some damaged, were left untouched.

Although oil prices have reached record highs, going past $ 50 a barrel and the island-nation suffered damage from Hurricane Ivan, it is expected to stay on course, recording between 2 to 3 % economic growth in 2004. In essence, Barbados should end 2004 with its economic plans on course.
That's according to an economic analysis prepared by Standard & Poor's, the prominent Wall Street credit rating firm which stated that withthe exception of Grenada, which was described as a "sad" economic case, most Caribbean countries, including Jamaica and the Bahamas which were hit by hurricanes this year should emerge relatively unscathed and should even register some economic gains.

"We don't believe either the oil price increases or the damage suffered as a result of hurricanes should have a major negative impact on growth this year in Barbados and other countries in the Caribbean," Olga Kalinina, an S&P analyst told.
"The same is true for Jamaica and the Bahamas and the rest of the sovereigns we rate. But that's not the case with Grenada whose economy was left in a shambles by Ivan. Grenada is a sad case." At the same time, Trinidad and Tobago's fast-paced growth, fuelled by its lucrative energy sector should continue to be a success story, she added.
"Trinidad and Tobago is in an extremely good economic position," added Kalinina.

Like other governments in the region the Arthur Administration in Bridgetown had made preparations for oil prices in its domestic economic calculations but the impact would be felt the "most" externally, was the way she put it.
"The continuing high oil prices were considered early in the beginning of the year" in Barbados and the rest of the Caribbean, Kalinina said. "Basically all of the countries in their budgetary presentations expressed that that could be one of the negative factors that may influence budgetary under-performance. That was particularly true of Jamaica where the prospect of increasing oil prices was specifically put in the budget presentation as one of the concerns.”

"All of the countries with the exception of Grenada were able to incorporate the increasing oil prices into their budgetary operations in a way that they have to address. They acknowledged it and they have to cut from somewhere else," stated Kalinina.
"We all would agree that it isn't a positive development. But so far we don't see a major impact on the fiscal side. On the external side, obviously, they would have to adjust somewhere else. But I think the countries were preparing for that. So they came to the table prepared."

Focusing specifically on the impact of the hurricane, S&P doesn't "really see that the hurricanes shifted" the weight against the credit ratings of Jamaica, The Bahamas and Barbados.
"In a sense the hurricanes have already been incorporated into the ratings," she said. "I don't believe there will be any kind of structural changes or major credit implications for the region as a whole as a result of the hurricane."

As S&P saw it, the Caribbean states, including Barbados, the Bahamas and Jamaica should end the year relatively unscathed.
"I would say so, yes," asserted Kalinina. "With the exception of Grenada we didn't change the ratings of the sovereigns. From what we see the sovereigns are coming out of the hurricane season as strong as they can in the circumstances. Let's put it that way. As far as the Bahamas, we didn't change the rating and we didn't change the rating for Barbados. Taking Grenada aside, the hurricanes didn't have a rating impact."