Caribbean Business Confidence Survey Reveals Mixed Results

by Amanda Banks, Tax-News.com, London

17 April 2003

A survey of business confidence in the Caribbean undertaken by accountanting firm, Ernst and Young has revealed a mixed picture amongst business regarding the region's economic outlook.

The Business Outlook Survey, published on Tuesday found that a mere 35% of Barbadian firms predicted stronger economic activity in the jurisdiction in the year to come. However, confidence appeared to be even lower in Jamaica, where some 86% of the businesses polled expressed a negative outlook for future economic activity.

These results presented a marked contrast with the third country which took part in the study, Trinidad and Tobago. There, 71% of the firms which took part in the survey were optimistic with regard to the county's economic outlook.

Various forces came into play which have affected business confidence in Barbados, according to the E&Y review. The survey revealed that firms took into account factors such as interest rates (64%), inflation (54%), exchange rates (55%), public spending (42%) economic growth projections (39%) and foreign exchange reserve levels (39%) when considering their economic outlook.

The survey also showed the countries' attitudes towards regional economic organisations such as the FTAA (Free Trade Area of the Americas) and the CARICOM Single Market and Economy (CSME). In Barbados, 62% of firms said they had received inadequate information from the FTAA, while 56% expressed similar sentiments regarding the CSME.

A similar trend was evident in Trinidad and Tobago, where only 26% of business leaders expressed satisfaction at the level of information that they had received regarding the likely impact of the FTAA on their firms. The figure was somewhat higher in Jamaica, with 47% of executives announcing that they were adequately informed about the FTAA.

In Barbados, the Ernst and Young study found 45% of firms intended to introduce new products or services as part of planned expansion. Additionally, 33% were considering alliances with other firms and 26% were exploring the possibility of joint ventures.

Just over one quarter of the companies surveyed said that they had no plans for expansion in the coming year, which E&Y concluded was due to global economic uncertainty.

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