economy, low energy prices and a global decline in conflicts. energy costs in the case of energy, the current level of oil prices must be of concern as the cost of utilities, operating costs and investment have constantly been an issue with respect to their cost impact on the tourism product in barbados. therefore, continued buoyancy in the price of oil will impact on economic prospects. government earlier this year passed on some of these price increases to the consumer. this had an impact on all sector of the economy, including tourism. this was however prior to the since galloping increase in oil prices. even the airlines have imposed a fuel tax but it is unclear whether this will have far - reaching implications. in a simulation run by the economists at the central bank it was found that a 25 % rise in domestic fuel prices reduces nominal gdp by approximately one percentage point, implying that higher oil prices do impact on overall output. an analysis by sector has not however been conducted so we are unable to say what proportion of this impact would borne by the tourism sector. exchange rate changes meanwhile exchange markets have been dominated by declines in the us dollar. not withstanding some rebound since last february, world economic outlook, an imf report, notes that the us dollar depreciated by 3 1 / 4 percent in trade weighted terms since september 2003 and by 16 ½ percent since its peak in february 2002. the dollar depreciated significantly against the euro and against the yen. this would have made travel from these source markets more attractive, and because the barbados dollar is tied to the us, would not have affected travel from the us market. the report also indicates that in developed economies ( our main source markets ) business confidence is rising, unemployment is improving, consumer confidence is up and global investment is promising. this augurs well for travel in late 2004 and 2005. the latin american market while latin america is not a major source market for the caribbean, eclac reports that rising commodity prices in latin america have resulted in the highest surplus in goods and services in 13 years and the best current account surplus in half a century. this would have positively affected discretionary income available for travel. however, it is not clear that the improvements are sufficiently significant as to lead to greater travel to the caribbean from those markets, but the information should be noted and monitored when future strategies involving that market are being developed. many caribbean markets also provide a continuing growth opportunity, particularly since some of our neighbours to the south are experiencing prosperous times

. comparative advantage in preparing for increased competitiveness, any country is best able to reap benefits if it specialises in areas on the basis of its comparative advantage. clearly tourism is an area in which barbados has a comparative advantage. in the case of tourism, our comparative advantage is one with which we were endowed. but competitive advantage can be built and engineered. also, the buoyant sectors can help to support other sectors. the offshore services sector is able to support the tourism sector. developments in that sector therefore ought to be of great interest to tourism officials and changes in the face of this sector should be monitored closely. it is important that we identify these linkages and build on these synergies. the development of local craft is an example of synergies between tourism and local manufacturing. in fact, the craft industry is largely a foreign exchange earner like any other export industry though it is not always so perceived. sectoral linkages tourism - linked sectors grow strongly when tourism performs well. consequently, distribution, utilities, and the transport and communication sectors have exhibited good growth rates over the same period. much of the major increases in construction activity, in particular, over the past five years, has been tourism - related. capital investment in the sector has also been a source of long term capital flows which benefit the balance of payments and help to boost our foreign exchange reserves. this emphasises the catalytic role which the tourism sector plays. if we can ensure that our service industry is globally recognised for its quality, we can also use our visiting tourists as marketing agents ( by word of mouth ) for our service products on a broader scale. the service and the quality of our products therefore have to be superior if we are going to use our tourism linkages to effectively sell them abroad, and this includes the ambience and the environment in which these sales take place. the cruise industry despite the rapid growth in long stay visitors, the fastest growth in numbers has been in the cruise business. i read recently that fifty percent of new cruises are destined for caribbean waters. yet the value - added from cruise visitors is very much lower than that for long stay visitors. this is something on which barbados and the region must strategise together so as to reap greater benefits. after our failed attempt to raise a tax on cruise passengers regionally, it may be time for us to seriously consider an entrance into the cruise business, either on our own or in partnership with others. it is a market