percent. this is in sharp contrast to growth of 5. 2 % and 3. 4 % respectively, in 2007 and 2008. furthermore, projections of a gradual recovery in 2010 are extremely tentative. with the slowing of economic activity in barbados ’ main trading partners expected to continue through the end of 2009, and possibly beyond, a downturn in the domestic economy is anticipated. tourist arrivals are set to fall, with knock - on effects on the wholesale and retail, transportation, storage and communication and business and other services sectors. in addition, even with government ’ s efforts to fast - track projects, there is likely to be a reduction in commercial and residential activity, particularly given the unfavourable conditions for accessing external project financing. commensurate with the downturn in real economic activity, the unemployment rate should trend upwards. on the upside, the moderation in global demand should continue to have a stabilising effect on international commodity prices, which in turn should subdue domestic inflation. the lower commodity prices should also translate into a lower import bill and a smaller current account deficit, though this outcome is likely to be tempered by the expected reduction in exports. in addition, the surplus on the capital and financial account balance is expected to increase, given the proceeds from the government ’ s bond issue on the trinidad and tobago market. despite these improvements, the surplus on the capital and financial account may still be sufficient to offset the current account deficit and therefore we expect a decline in the net international reserves ( nir ). the prevailing low interest rate environment is likely to characterise the financial system for some time yet. a positive outcome of this is that it would facilitate government borrowing from the domestic market to finance what is forecasted to be a larger fiscal deficit relative to 2008. this deterioration is to be expected given the government ’ s plans to apply various forms of fiscal stimulus, including fast - tracking construction projects already in the pipeline. nonetheless, the fiscal authorities will face significant challenges meeting the demands of their countercyclical policy, but at the same time, prevent a significant deterioration in the fiscal accounts. this task is made even more challenging, given that the economic downturn is likely to result in a noticeable slowdown in the growth of tax revenue. as members of baraifa, i am sure that you are particularly interested in the likely impact of all these developments on the insurance sector. as you are all aware the very public difficulties of the largest insurer in the world aig

delisle worrell : barbadians have every reason to be confident of our economic future op - ed article by dr delisle worrell, governor of the central bank of barbados, 31 october 2013. * * * barbados is well placed to address the challenging circumstances our economy faces. we have achieved a very high standard of living, the highest among independent caribbean countries in the human development index, and on par with industrial countries. we rank a respectable 47th of 147 countries in the world competitiveness index, and are first among caribbean countries in the index. barbados ’ economic policy making arrangements are superior and our institutions are world class. barbados ’ social and political stability are highly regarded internationally, and the country has good physical infrastructure. how we make policy : the stability of our dollar is foremost in the minds of all barbadians, and the value of the currency is protected by the adequacy of the central bank foreign exchange reserves. every day the minister of finance and top policy makers of the central bank and ministries of finance and economic affairs receive a chart of the foreign exchange reserves, and each month this economic team meets to monitor and discuss the latest developments in the economy and to make adjustments as necessary. the team produces an annual forecast which informs fiscal policy : the budget is designed to match foreign exchange outflows to expected inflows, with a mid - year budget correction, if necessary. the recent budget was a world - class effort, which few democracies have emulated : a steep decline in our reserves became evident only in may this year and by the first week of june cabinet had agreed on the magnitude of the adjustment that would be necessary. a national economic consultation on june 24 secured buy - in from the social partners. this was followed by discussions with all stakeholders and the passage of the august 15 budget, by all accounts fit for purpose, of the right magnitude and with appropriate incentives. for a democratic process, this was a remarkably swift reaction. the growth strategy : the barbados economy is fuelled by foreign exchange. we do four things at internationally competitive prices ( tourism, international business, rum and green energy ) and the foreign exchange we earn and save from these is used to fuel the imports we need for production and consumption. to grow the economy sustainably, we have to grow the foreign exchange earning sectors. fiscal stimulus is not sustainable, because government doesn ’ t earn foreign exchange. growth is led by the private sector, while government provides incentives and faci