Local businesses feeling the financial pinch

The majority of companies in St. Vincent and the Grenadines have reported a worsening in their financial performance, a trend they expect to continue in the short term.{{more}}

In a study conducted by the University of the West Indies in September this year, 56 per cent of 87 companies surveyed in this country said their financial performance was worse or much worse than six months ago, while 18 per cent said it was better. 26 per cent reported there was no change.

Despite this, companies here seem disinclined to layoff workers as a means of responding to their worsening financial performance.

These were among the findings of a recent study published by the Department of Management Studies at UWI, Cave Hill: “Barbados and OECS Corporate Performance and Outlook Report”.

The results of the survey are based on responses from 758 companies in Barbados, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines.

Head of the Cave Hill Department of Management Studies Vincentian Dr Justin Robinson told SEARCHLIGHT that the report is the first in a series of quarterly reports to be published by his department. Data for the next report will be collected in January 2010.

The decline in financial performance is evident across a broad variety of industries. The entertainment and education and cultural services industries have managed to weather the storm so far and report improved financial performance, whilst all other industries report a worsening of financial performance over the last six months.

The report says, “While the declines in construction, retail, wholesale and tourism related industries are to be expected, it is somewhat surprising that the public utilities sector should report the most significant decline in financial performance.”

The majority of companies in St. Kitts, St. Lucia, Dominica and St. Vincent expect the decline in financial performance to continue for another six months, while a majority in Grenada, Barbados and Antigua expect financial performance to improve over the next six months. However, the majority of companies in all countries expect financial performance to improve within a year.

Despite this, the investment outlook for the corporate sector in Barbados and the OECS is bleak over the next six to twelve months. The survey results indicate that the majority of companies have no capital investments of any form planned over the next six or twelve months.

In terms of the global economic outlook, the majority of companies in all countries expect the global economy to improve over the next six months, with companies in Barbados and St. Lucia being the most optimistic, while those in St. Vincent and Dominica the least optimistic.

(See page 48 for the report. The full report including all figures and tables may be requested by emailing editor@searchlight.vc).