Bigger test for consumers
“Pessimistic” Barbadian consumers are feeling the strain of higher expenses, lower savings and stagnant income levels.
While expectations were high following the May 24 General Election, Barbados-based surveillance and forecasting firm Antilles Economics suggested already low consumer confidence would be tested by the International Monetary Fund (Imf)-sponsored economic recovery programme.
Antilles Economics recently released the findings of its Snapshot of Consumer Confidence 2018 survey, conducted “around the time of the general election”.
Managing director Stacia Howard said the company examined Barbadian consumer’s perceptions of economic conditions in May and found “respondents were pessimistic about their households’ current conditions, with 45 per cent saying that their household’s situation was worse today than one year ago”.
“Persons between 56 and 70 years old were particularly negative: 75 per cent believed that their current situation was worse than one year ago. When considering differences by income, across all income categories at least one in four persons were negative about their current situation,” she said.
This “in person” consumer survey had responses from a final sample size of 300 people. To adjust for differences in response rates, the responses were weighted by the contribution of each gender and age group to the total working age population.
The former Central Bank senior economist said the major reason Barbadians seemed pessimistic about their current circumstances “appear to be higher expenses and lower levels of savings, as income levels remained the same”.
“Respondents expected their income and savings to improve within the next 12 months – although 46 per cent also believed their expenses would be higher – which supports their belief that in the next 12 months their household’s situation would improve. As a result, 44 per cent of respondents believed that their household’s situation would be better within the next 12 months,” she added.
“The younger generations were the most positive, with 50 per cent of persons between 21 and 55 years of age believing that their situation would improve compared to just 12 per cent of their older peers. The results by income suggested that as income increased, confidence in the future declined.”
Howard also said “when considering business and economic conditions Barbadians were very pessimistic about current conditions, but more optimistic about the future”.
“Respondents were most likely to take a holiday (either in Barbados or abroad), remodel their home and buy appliances, with 70 per cent, 37 per cent and 30 per cent, respectively, saying that they intend to do these activities within the next 12 months,” the survey found.
Howard said post-survey Barbados negotiated a four-year Extended Arrangement under the Extended Fund Facility of the IMF to correct the country’s balance of payments and fiscal challenges.
She said new fiscal measures were “a significant strain on consumers, who, from the May 2018 survey, were expecting business and economic conditions to improve”.
“The disconnect between their expectations and the eventual reality could be linked to the optimism that accompanied the general elections that took place in May 2018. Voters might have expected the change in administration to lead to improvements in economic and business conditions in the short term,” she asserted.
Antilles Economics’ next consumer confidence survey will be done this month and Howard said this would “reveal the impact of the economic recovery programme on consumer confidence”.