The Barbados economy was already growing but at a declining rate of 3

The Barbados economy was already growing but at a declining rate of 3.8% between 2005-2007. The 2007 Cricket World Cup along with good travel credits were the main reasons for the growth during the 2005-2007 period. Unfortunately, due to the global financial crisis which shocked the economy low growth rates were recorded for the following years. The main foreign exchange earning sectors which included the tourism industry, financial services and sugar sector services recorded declining growth to a large extent contributed to the suboptimal performance of these sectors impacted adversity on the overall national economic performance. Also of significance, the construction industry was on a decline. It should also be mentioned that these same sectors generated significant employment opportunities. Additionally inflation was spiked to as high as 11.2%. Prior to the downturn of the economy the unemployment rate was declining from 9.6% to 7.4% during 2004-2007, as a result of the economic crisis the rate spiked to around 10%. High unemployment rate also impacted on economic growth because of the decline in disposable incomes of residents. National and Foreign investments was also low during this period which also combined to contribute to the poor performance of the economy. Clico Barbados having to operate in an economy that depended heavily on external factors found itself very vulnerable in terms of performance. Unfortunately with the occurrence of the financial crisis, the situation escalated. However the fact that the Barbados economy is heavily dependent on external factors cannot be considered the only reason for the inadequate performance of Clico during this period. In assessing Clico’s performance during this period one should look critically at the overall management practices and various investment strategies of Clico Barbados. Indeed, it can be argued that the collapse of Clico could be traced back to the inadequacies of its management and investment decisions. For example, Clico Barbados used funds gained from depositors to invest in high risk asset purchases which did not have a good rate of return. Additionally, the interest rates proposed to these depositors were significantly higher than interest rates proffered by other financial institutions. Business activities and poor decision making of Clico Barbados prior to its collapse ensured that collapse or financial hardship would be at the front door rather sooner than later whether or not there was the occurrence of a global or national financial crisis.

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