2015 q3 business outlook (barbados) analysis and comment
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Business Outlook 2015 Q3 Summary Business confidence is a unique gauge of economic activity. It is the measurement of what business owners and
executives think is going to happen in the future. Therefore, business confidence reports are one of the few
forward looking data sets available to members of the business community.
Business confidence reports therefore represent an important source of information for businesses. Because of the
uncertainty involved it is strongly recommended that a variety of information sources be utilized by both the
business community and policy makers for more effective decision-making.
ABELIAN Consulting Services, in collaboration with the Barbados Chamber of Commerce & Industry (BCCI) has set
about trying to understand confidence levels over time and developed this series of surveys. The objective is to
assist local businesses in their decision-making by understanding LOCAL data and information. Business therefore
do not have to rely on national data or the media, for information on business confidence levels.
This is the second instalment of the Business Outlook for Barbados and we wish to sincerely thank the BCCI and
other associations within the Barbados Private Sector Association (BPSA) that made this survey possible.
We wish to especially thank the many business owners and executives that took the time out of their busy
schedules to participate in the survey and answering the questions.
Conducted by ABELIAN Consulting Services
in collaboration with Barbados Chamber of Commerce & Industry
Barbados
www.abelianconsulting.com Page 2 of 13 Business Outlook 2015 Q3
SURVEY METHODOLOGY
The Business Outlook survey was designed
and executed to capture business
responses in Barbados.
The survey questions were designed with
input from the BCCI Trade and Economic
Policy Committee and ongoing feedback
from participants. This would allow for
benchmarking confidence levels on
Barbados against other countries over a
period of time.
Opening on Tuesday April 07, 2015 and
closing on Monday April 20, 2015, the survey
was distributed exclusively online via email
to a wider cross section of the business
owners and executives.
The questions were short and simple and
took on average approximately 8 minutes to
complete for most respondents.
The last question asked if the respondent
wished to leave their email address for
purposes on email alerts regarding the
release of the results. The privacy of all
respondents will be maintained at all times.
Although the survey is qualitative in nature,
the reported statistic for each question is a
single net balance number where
applicable. That is, for each question the
respondent is asked to indicate “improved”
or “increased”, “deteriorated” or
“decreased”, or “remained the same”.
Respondents are expected to extrapolate
from their own experience driven by internal
performance data when answering the
questions in the surveys whilst also taking into
consideration any relevant issues currently
affecting their industry and/or sector. The
responses are then converted into a net
balance statistic via the calculation:
𝑛𝑒𝑡 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 (%) = [(𝑖 − 𝑑)
(𝑖 + 𝑑 + 𝑟𝑡𝑠)] ∗ 100
Where 𝑖 is the number of “improved”
responses; 𝑑 is the number of “deteriorated”
responses; and 𝑟𝑡𝑠 is the number of “remain
the same” responses;
FIGURE 1: CONFIDENCE RANGE
Figure 1 shows the range of the net balance
statistic which has a minimum of -100 (0
improved and remained the same
responses) and a maximum of +100 (0
deteriorated and remained the same
responses).
Research shows a strong positive correlation
between business confidence and
economic growth. Countries with consistent
metrics on the greener end of the
confidence spectrum tend to have stronger
economic performance which is
underpinned by the robust business activity.
Very low Low Balanced Moderate High
-20 +20 +60 +100-100 -60
www.abelianconsulting.com Page 3 of 13 Business Outlook 2015 Q3
Industry Analytics
Industry Responses Percent
Agribusiness 3 3%
Banking 2 2%
Business services 8 8%
Construction 6 6%
Consulting 4 4%
Education 0 0%
Energy 2 2%
Engineering 1 1%
Entertainment 0 0%
Financial Services 7 7%
Hospitality 3 3%
Hotel/Accommodation 3 3%
Information Systems 2 2%
Insurance 5 5%
Legal 13 12%
Leisure 1 1%
Manufacturing 21 20%
Marketing 1 1%
Media/Publishing 1 1%
Non-profit association 1 1%
Real Estate 5 5%
Retail 7 7%
Technology 2 2%
Telecommunications 1 1%
Transportation 3 3%
Wholesale 4 4%
TOTAL 211 100%
Skipped 40
The major respondents to this survey were
from the finance sector (16%) which
includes banking, insurance and financial
services executives. Manufacturing and
level professionals both represent 13% of the
respondents.
Category Responses Percent
Micro (<=10) 42 38%
Small (11-50) 38 34%
Medium (51-100) 11 10%
Large (101 or more) 20 18%
Total 111
Skipped 15
Responses from small and medium size
businesses made the majority (73%) of the
survey.
NUMBER OF RESPONDENTS
There were 126 responses to the Business
Outlook 2015 Q3 compared to 251 during
2015 Q2.
56
251
126
0
100
200
300
2015Q1 2015Q2 2015Q3
Survey Responses
www.abelianconsulting.com Page 4 of 13 Business Outlook 2015 Q3
General Business Confidence
Net balance (%): -28%
Confidence: LOW
Net balance (%): -15%
Confidence: BALANCED
For the third straight quarter, respondents
generally felt more positive about general
business conditions in 12 months’ time than
in the shorter term. Whilst the percentage
who believes conditions will deteriorate is
fairly steady around 40% for all three outlook
periods, a larger number of respondents 28%
believe business conditions will improve over
the next 12 months when compared to the
next 3 months (10%).
These shorter terms metrics don’t provide
the business signals that economic growth
will likely be robust for the remainder of 2015.
As a result, business confidence levels range
from low with regards over the next 3-6
months to negatively balanced over the
next 12 months.
We are almost at the point where some
validation of the expectations for general
business conditions can be conducted. This
type of data validation could assist us with
determining how realistic the longer term
(12-month) business outlook is vis-à-vis the
shorter term (3-month). In short, we should
be able to decipher whether the forward
looking optimism is consistent with actual
business performance.
51%
40%
10%
0% 20% 40% 60% 80% 100%
Remained the same
Deteriorated
Improved
2015Q3 A1.1: With regard to the Barbados Economy, do you believe that General Business
Conditions in 3 months' time will have?
44%
42%
14%
0% 20% 40% 60% 80% 100%
Remained the same
Deteriorated
Improved
2015Q3 A1.2: With regard to the Barbados Economy, do you believe that General Business
Conditions in 6 months' time will have?
29%
43%
28%
0% 20% 40% 60% 80% 100%
Remained the same
Deteriorated
Improved
2015Q3 A1.3: With regard to the Barbados Economy, do you believe that General Business
Conditions in 12 months' time will have?
www.abelianconsulting.com Page 5 of 13 Business Outlook 2015 Q3
Economic Indicators
Net balance (%): -58%
Confidence: LOW
Net balance (%): -1%
Confidence: BALANCED
Net balance (%): -16%
Confidence: BALANCED
Respondents were not very positive with
their expectations for employment as just
over two-thirds (69%) expect the
unemployment rate to increase over the
next 12 months. Overall confidence
amongst respondent for this indicator has
remained low since this survey has
commenced. There is clearly more
optimism regarding general business
conditions over the next 12 months,
however, if these sentiments hold true then
the economy is likely to experience jobless
growth.
Despite the announcement of the
liberalization of interest rates on April 7, 2015,
a majority of respondents (58%) felt that
interest rates on loans would not change in
12 months’ time. Further, some 21% indicate
an expectation that interest rates on loans
will rise, this is 7% lower than the 2015 Q2
response level. Overall, the confidence
indicator is negatively balanced.
Similarly, 52% of respondents felt that interest
rates on overdrafts will remained
unchanged in 12 months’ time. 32% also felt
that these rates on overdraft will increase.
The overall confidence indicator is therefore
characterized as negatively balanced.
20%
69%
11%
0% 20% 40% 60% 80% 100%
Remained the same
Increased
Decreased
2015Q3 A3.1: How do you expected the Unemployment Rate to have changed in 12
months' time?
58%
21%
21%
0% 20% 40% 60% 80% 100%
Remained the same
Increased
Decreased
2015Q3 A3.2: How do you expected Interest Rates on Loans to have changed in 12 months' time?
52%
32%
16%
0% 20% 40% 60% 80% 100%
Remained the same
Increased
Decreased
2015Q3 A3.3: How do you expected Interest Rates on Overdrafts to have changed in 12 months'
time?
www.abelianconsulting.com Page 6 of 13 Business Outlook 2015 Q3
Firm Level Confidence
Net balance (%): +8%
Confidence: BALANCED
Net balance (%): -12%
Confidence: BALANCED
Net balance (%): -14%
Confidence: BALANCED
One-third of respondents expect their firm’s
real business activity to increase over the
next 12 months whilst nearly 41% expect this
indicator to remain the same. 1 out of every
4 respondents however expects real
business activity to decrease. The net effect
is a positively balanced confidence
indicator. This is consistent with general
business conditions indicator for the same
time period.
With respect to real profits, 1 out of every 3
respondents (34%) expects their firm’s real
profits to decrease over the next 12 months.
The confidence level for this indicator is
negatively balanced. Though it is within the
same range as the real business activity
indicator, there is a 20 percentage point
differential between indicators that may be
somewhat counterintuitive.
Firm level expectations for employment
prospects over the next 12 months are
bearish as some 26% expect their staffing
levels to be reduced. Approximately 18% of
those expecting to their firm’s employment
levels to decline in the next 12 month were
BCCI members. The negatively balanced
confidence rating for this indicator is an
improvement from the previous quarter
when the statistic was classified as low with
an estimated value of -25%. Notably, 63%
of respondents indicated their firm is
expected to maintain the same level of
employment over the next 12 months which
is a very good sign since it up 20% from 2015
Q2.
41%
25%
33%
0% 20% 40% 60% 80% 100%
Remained the same
Decreased
Increased
2015Q3 B1: With regard to Your Business, how do you expect Real Business Activity to have changed
in 12 months' time?
45%
34%
21%
0% 20% 40% 60% 80% 100%
Remained the same
Decreased
Increased
2015Q3 B2: With regard to Your Business, how do you expect Real Profits to have changed in 12
months' time?
63%
26%
12%
0% 20% 40% 60% 80% 100%
Remained the same
Decreased
Increased
2015Q3 B3: With regard to Your Business, how do you expect Employment to have changed in 12
months' time?
www.abelianconsulting.com Page 7 of 13 Business Outlook 2015 Q3
Firm level Confidence
Net balance (%): +11%
Confidence: BALANCED
Net balance (%): +25%
Confidence: MODERATE
Net balance (%): -37%
Confidence: LOW
There were 54 responses to the question
related to the holding of inventories over the
next 6 months. The level of confidence in
this area was both positively balanced as
shown in the chart. When asked about the
next 3 months, the over indicator was
negatively balanced (-15%). Of note
however, was that more respondents felt
their inventory levels would increase in 6
months’ time relative to in 3 months’ time.
For businesses involved in construction, there
were 16 responses. Almost 50% expected
residential construction to increase over the
next 12 months. In the previous quarter, only
22% felt there would be an increase in this
category of activity though on a larger
number of responses. The net balance
statistic for indicator was moderate which is
a good sign for the recovery of construction
activity in the country if it materializes.
In spite the deregulation of monetary policy
with respect to interest rates on deposits,
only 14% of respondents felt it would be
easier to get credit in 12 months’ time. 51%
felt it would be harder whilst 35% thought
access to credit would be the same. The
net balance statistic means that the overall
confidence level for this important indicator
is low.
37%
26%
37%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Remained the same
Decreased
Increased
2015Q3 B10: With regard to Your Business, how do you expect Inventories to have changed in 6
months' time?
38%
19%
44%
0% 20% 40% 60% 80% 100%
Remained the same
Decreased
Increased
2015Q3 B11: If your business is involved in Construction, how do you expect your Volume of
activity for Residential Building to have changed in 12 months' time?
35%
51%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
Remained the same
Harder
Easier
2015Q3 B13: Will it be easier or harder to get credit in 12 months' time?
www.abelianconsulting.com Page 8 of 13 Business Outlook 2015 Q3
Business Performance (last 6 months)
Net balance (%): -18%
Confidence: BALANCED
Over the last 6 months, 37% reported that
their businesses performed weaker than the
previous 6 months which has not changed
from the previous quarter. In 2015 Q2,
business performance estimates were better
than in the current quarter as more
executives indicated experiencing stronger
business performances, 26% versus only 19%
currently.
The confidence level for the current period
is negatively balanced as more firms (37%)
indicated registering a weaker performance
in the last 6 months than those that had a
better outturn (19%) when compared to the
previous 6 months.
Business Performance (next 6 months)
Net balance (%): +6%
Confidence: BALANCED
Over the next 6 months, more business
owners and executives expect their firms to
perform stronger than the last 6 months by a
margin of 6% compared to those that
believe their businesses will perform weaker.
In 2015 Q2 the same margin was 17%.
Compared to 36% in 2015 Q2, 27% of
respondents now anticipate an improved
business performance over the next 6
months.
This net balance statistic for this quarter is still
a positively balanced level of confidence
and perhaps represents some green shoots
of growth looking ahead. Small and micro
businesses being more optimistic in the short
term is a good signal.
Some caution must be taken as both
business performance metrics have
declined since the last quarter.
9%
28%
44%
17%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
Much weaker
Somewhat weaker
About the same
Somewhat stronger
Much stronger
2015Q3 C1: How has your business performed over the LAST 6 months relative to the previous 6
months?
5%
17%
52%
24%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Much weaker
Somewhat weaker
About the same
Somewhat stronger
Much stronger
2015Q3 C2: How do you believe your business will perform in the NEXT 6 months compared with the
last 6 months?
www.abelianconsulting.com Page 9 of 13 Business Outlook 2015 Q3
Major Constraints on Business
In your opinion, what are the major constraints on the growth of your business?
Respondents could select more than one answer to this question. Answer choices Responses Percentage Rank
National economic performance 85 67% 1
Rising overheads and utility costs 49 39% 2
Price pressure from customers 48 38% 3
Price pressure from competitors 41 33% 4
Problems with government
planning regulations 38 30% 5
Declining customer base 33 26% 6
Licensing and regulations 30 24% 7
Regional economic performance 29 23% 8
Global economic performance 25 20% 9
Rising production costs 24 19% 10
Increased competition from low
cost imports 22 17% 11
Difficulties in obtaining finance /
extending credit facilities 21 17% 12
Price pressure from suppliers 20 16% 13
Availability of skilled workers 17 13% 14
Rising transport costs 16 13% 15
Declining visitor numbers 12 10% 16
Broadband and information
technology access 7 6% 17
Transport infrastructure 6 5% 18
Environmental catastrophes
(hurricanes, flooding,
earthquakes etc.)
4 3% 19
Reduced demand for exports 4 3% 19
Access to training 3 2% 21
Limited supply of production
materials and/or product 2 2% 22
Shortage of commercial land 2 2% 22
Declining demand from
customers 0 0% 24
www.abelianconsulting.com Page 10 of 13 Business Outlook 2015 Q3
Feedback
The following is a selection of comments provided by respondents on general issues
affecting businesses in Barbados.
Increase Port Taxes, Length of time documents
are processed through Customs, Length of time
Goods are cleared from the Port. Length of
time payment is made by Debtors.
The economy need stimulating, small, medium
and large, Government seems to be interested
in only large projects.
Lack of confidence in Government policies.
Regulation, taxes and policies that are
implemented without discussion with
stakeholders i.e. solid waste tipping fee,
renewable energy regulations, changes in VAT
etc.
There needs to be greater linkages between
businesses in the agriculture and retail and
tourism businesses.
No VAT returns since 2011 while we cannot
collect VAT as we are zero rated over 300k
owed to a small agro business- and no one in
the BRA even has the decency to reply to
correspondence. Inputs for hi tech agriculture
are subject to VAT and in many cases tax
because of their specialty nature which fall
outside the Classical agricultural box. I’m
seriously viewing options to close the company
at the end of 2015.
Unchallenged accusations of serious corruption
within cabinet are harming Barbados'
reputation. It is also making many Barbadians
lose faith in the system and this is harming
longer term investment.
The current industrial relations climate is
affecting our business negatively. We depend
on imports and any negative movement in that
area affects us. This has resulted in the
company missing vital opportunities to sell
product as we can’t sell what is still in the Port.
Government contracts are the largest accounts
receivable which banks do not consider
collectible. These accounts receivables are
taken out of the bottom line when applying for
finance. Thus private companies with
Government contracts are getting slower and
slower at paying their debts as they become
cash tied. The whole system is grinding to a halt.
The BCCI needs to keep pressing the point to
Gov't that with business development &
expansion generates the tax revenue that they
so desperately need. Continual increasing of
taxes on an already overburdened society with
increasing unemployment is myopic and
unsustainable.
www.abelianconsulting.com Page 11 of 13 Business Outlook 2015 Q3
-16%
-10%
-7%
-25%
-20%
-15%
-10%
-5%
0%
2015 Q1 2015 Q2 2015 Q3
Business Confidence
Economic Analysis
The latest results of the Business Outlook 2015 Q3 show that businesses are still experiencing
tough times. As a result, overall economic activity continues to struggle in the face of
multiple challenges currently facing businesses. Firms are bearish about their own
employment prospects and a significant proportion view access to credit as getting harder
over the next 12 months.
Though the low response in 2015Q1 makes it difficult to deliver meaningful comparisons for
individual confidence indicators, we can still review the overall business climate with some
degree of confidence. The overall business confidence for 2015 Q3 is still negatively
balanced and estimated at -7%, compared to -16% and -10% during 2015 Q1 and 2015 Q2
respectively. Of the 21 indicators which the net balance statistic is calculated, 9 registered
positive measures of confidence which are as follows:
Real business activity in 12 months’ time (+8%)
Price of good/service in 3 months’ time (+12%)
Investment in buildings, plant and equipment in 12 months’ time (+2%)
Real exports in 12 months’ time (+26%)
Capacity Utilization in 3 months’ time (+4%)
Inventories in 6 months’ time (+11%)
www.abelianconsulting.com Page 12 of 13 Business Outlook 2015 Q3
Volume of activity in residential construction in 12 months’ time (+25%)
Volume of activity in non-residential construction in 12 months’ time (+12%)
Business Performance over the next 6 months (+6%)
These 4 indicators fall in the balanced category and is not sufficient to offset the negative
confidence levels of the other 17 indicators to reach positive territory overall.
Interestingly, the monetary policy announcement by the Central Bank of Barbados at the
beginning of the survey period did not appear to have any significant influence the
responses as it relates to interest rates on loans and overdrafts and the relative ease of
accessing credit in general. Only 10% expected lower interest rates on overdrafts in 12
months’ time, whilst 21% expect rates of loans to decrease. Some 86% also expected that
it’ll be harder to access credit in 12 months’ time (44%) whilst 42% expected access to
remain the same.
On the bright side, firms are much more positive and upbeat about the future, with 36% of
business owners and executives expecting stronger trading levels over the next 6 months.
Only 20% expect a weaker performance over the next 6 months. For there to be significant
growth in in the economy this year, this optimism must be translated into improvement in real
business activity which should be accompanied by the higher employment levels.
Following the presentation of the Budgetary Proposals and Financial Statement in June 2015,
there will likely be a negative impact on the cash flow of some business segments as there
will need to be an outlay of cash in order to remain tax compliant. Despite having a better
outlook over the next 12 months, shorter term challenges may well prove difficult in finding
available cash to settle new tax bills and will likely dampen new investment require to
maintain or expand business activity.
www.abelianconsulting.com Page 13 of 13 Business Outlook 2015 Q3
Acknowledgements
With the support of the following organizations this survey would not have been possible.
We would like to sincerely thank the following:
Barbados Agricultural Society – http://www.basonevoice.org/
Barbados Association of Retired Persons – http://www.barpbb.com/
Barbados Bankers’ Association
Barbados Chamber of Commerce & Industry – http://barbadoschamberofcommerce.com/
Barbados Coalition of Service Industries - http://bcsi.org.bb/
Barbados Employers’ Confederation– http://www.barbadosemployers.com
Barbados Hotel and Tourism Association – http://www.bhta.org/
Barbados Industrial Development Corporation – http://www.bidc.org/
Barbados International Business Association – http://www.biba.bb/
Barbados Manufacturers’ Association – http://www.bma.bb/
Barbados Small Business Association – http://www.sba.org.bb
Hoyos Publishing
Institute of Chartered Accountants of Barbados (Associate Member) – http://www.icab.bb
Miller Publishing
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