The Cen­tral Bank of Bar­ba­dos (CBB) Wednes­day pro­ject­ed that the is­land’s econ­o­my is poised for sus­tained growth in 2025 and be­yond and that an an­nu­al av­er­age re­al gross do­mes­tic prod­uct (GDP) ex­pan­sion rate of three per cent is an­tic­i­pat­ed in the short- to medi­um-term.

“This pro­jec­tion hinges on con­tin­ued in­vest­ments by both the pub­lic and pri­vate sec­tors, as well as on­go­ing im­prove­ments in pro­duc­tiv­i­ty and com­pet­i­tive­ness,” CBB Gov­er­nor, Dr. Kevin Greenidge, told a news con­fer­ence as he re­viewed Bar­ba­dos’ econ­o­my for the Jan­u­ary to De­cem­ber pe­ri­od last year.

He said Bar­ba­dos had achieved ro­bust eco­nom­ic growth in 2024, mark­ing three con­sec­u­tive years of ex­pan­sion and sur­pass­ing the es­ti­mat­ed glob­al growth rate.

Greenidge said that re­al GDP in­creased by four per cent, dri­ven by strong per­for­mances in busi­ness ser­vices, tourism, con­struc­tion, and re­tail trade sec­tors. He said in­fla­tion con­tin­ued its down­ward tra­jec­to­ry due to sta­bil­is­ing price pres­sures, while a de­clin­ing un­em­ploy­ment rate and few­er job­less claims high­light­ed im­prove­ments in labour mar­ket con­di­tions.

“These re­sults un­der­score the pos­i­tive ef­fect of tar­get­ed eco­nom­ic re­forms and pro­vide a sol­id plat­form for fu­ture sus­tain­able growth,” the CBB Gov­er­nor told re­porters.

He said Bar­ba­dos reg­is­tered a record lev­el of gross in­ter­na­tion­al re­serves, es­ti­mat­ed at BDS$3.2 bil­lion (One Bar­ba­dos dol­lar=US$0.50 cents), equiv­a­lent to 31.2 weeks of im­port cov­er, adding “this re­flects strong net for­eign ex­change in­flows from high­er tourism re­ceipts and tax rev­enue gen­er­at­ed by the glob­al busi­ness sec­tor”.

The Cen­tral Bank said that the fis­cal po­si­tion im­proved sig­nif­i­cant­ly dur­ing the first three quar­ters of the fi­nan­cial year 2024/25 and that gov­ern­ment’s op­er­a­tions re­sult­ed in an over­all sur­plus of BDS$224.8 mil­lion (1.5 per cent of GDP), com­pared to a deficit of BDS$7.7 mil­lion (0.1 per cent of GDP) in the pre­vi­ous pe­ri­od.

It said sim­i­lar­ly, the pri­ma­ry sur­plus ex­pand­ed by BDS$278.8 mil­lion to reach BDS$774.1 mil­lion (5.3 per cent of GDP), dri­ven by broad-based rev­enue growth and pru­dent ex­pen­di­ture man­age­ment.

Greenidge said that these fis­cal gains, along with the strong eco­nom­ic growth, con­tributed to a re­duc­tion in the debt-to-GDP ra­tio, which fell to 103 per cent, down from 109.8 per cent at the end of 2023.

He said the fi­nan­cial sec­tor re­mained sta­ble, fur­ther bol­ster­ing eco­nom­ic re­silience. De­clin­ing non­per­form­ing loans (NPLs), ro­bust cap­i­tal buffers, and am­ple liq­uid­i­ty sup­port­ed sta­bil­i­ty across de­posit-tak­ing in­sti­tu­tions (DTIs).

“These pos­i­tive out­comes re­in­forced the sec­tor’s ca­pac­i­ty to with­stand shocks and laid a strong foun­da­tion for sus­tain­able eco­nom­ic growth head­ing in­to 2025,” he added.

The CBB said that the eco­nom­ic growth last year re­flect­ed re­silience and ex­pan­sion across key sec­tors in both trad­ed and non-trad­ed sec­tors.

The tourism and man­u­fac­tur­ing pro­pelled a 5.5 per cent ex­pan­sion in the trad­ed sec­tor, de­spite chal­lenges in agri­cul­ture due to ad­verse weath­er con­di­tions. Con­cur­rent­ly, the non-trad­ed sec­tor grew by 3.7 per cent, sup­port­ed by in­creased do­mes­tic de­mand, with no­table con­tri­bu­tions from busi­ness and oth­er ser­vices, con­struc­tion, and whole­sale and re­tail trade.

The CBB said that tourism ac­tiv­i­ty ex­pand­ed sig­nif­i­cant­ly in 2024, un­der­pinned by in­creased air­lift and ma­jor events. Long-stay ar­rivals rose by 10.7 per cent (67,800 vis­i­tors), on the strength of ex­pand­ed air­line ca­pac­i­ty, crick­et match­es, and the Crop Over Fes­ti­val.

The Unit­ed States mar­ket con­tributed 76 per cent of the growth, with ar­rivals surg­ing by 29.2 per cent due to a 49.3 per cent in­crease in seat­ing ca­pac­i­ty. Vis­i­tors from Cana­da and the Caribbean Com­mu­ni­ty (CARI­COM) grew by 13 per cent and 4.7 per cent, re­spec­tive­ly. How­ev­er, UK ar­rivals fell by two per cent, and oth­er Eu­ro­pean vis­i­tors de­clined by 1.7 per cent due to re­duced air­lift ca­pac­i­ty.

The CBB said ac­com­mo­da­tion per­for­mance re­flect­ed strong de­mand in 2024. The av­er­age ho­tel oc­cu­pan­cy rate in­creased by one per­cent­age point to 64.3 per cent by year-end. Ho­tels record­ed high­er earn­ings for the 15th con­sec­u­tive quar­ter, with av­er­age dai­ly rates ris­ing by 11.5 per cent, lead­ing to a 12.6 per cent growth in rev­enue per avail­able room (RevPAR).

In con­trast, the shar­ing econ­o­my ex­pe­ri­enced mixed re­sults; av­er­age oc­cu­pan­cy rates grew by 4.3 per­cent­age points to 55.2 per cent, but low­er dai­ly rates led to a 9.5 per cent de­cline in RevPAR.

The CBB Gov­er­nor said that Bar­ba­dos’ ex­ter­nal po­si­tion re­flect­ed pos­i­tive trends in key ar­eas, de­spite some chal­lenges.

He said strong growth in tourism spend­ing and high­er in­ter­na­tion­al cor­po­rate tax re­ceipts bol­stered the ex­ter­nal sec­tor’s per­for­mance, nar­row­ing the cur­rent ac­count deficit to 4.5 per cent of GDP, com­pared to 8.6 per cent in the pre­vi­ous year.

How­ev­er, small­er fi­nan­cial ac­count in­flows, in­creased im­port pay­ments, and high­er for­eign debt ser­vice tem­pered the pace of for­eign re­serve ac­cu­mu­la­tion. These de­vel­op­ments high­light the con­tin­ued re­silience of the ex­ter­nal sec­tor amidst glob­al un­cer­tain­ties.

Bar­ba­dos’ in­ter­na­tion­al re­serves at the end of 2024 reached the high­est end-of-year po­si­tion on record with the  CBB not­ing that gross in­ter­na­tion­al re­serves reached a year-end his­toric high of BDS$3,184.3 mil­lion, rep­re­sent­ing an in­crease of BDS$184.8 mil­lion over the year.

“This build-up re­flect­ed im­prove­ments in the cur­rent ac­count, in par­tic­u­lar, ro­bust tourism ac­tiv­i­ty and high­er tax re­ceipts.

How­ev­er, for­eign re­serve ac­cu­mu­la­tion slowed com­pared to 2023, as re­duced for­eign bor­row­ings and in­creased ex­ter­nal debt ser­vic­ing mod­er­at­ed growth,” the CBB said, adding that at the end of the year, the re­serve im­port cov­er stood at 31.2 weeks, sig­nif­i­cant­ly above the in­ter­na­tion­al bench­mark of 12 weeks.

Re­gard­ing the fu­ture eco­nom­ic out­look for Bar­ba­dos, Gov­er­nor Greenidge said in­vest­ments in key sec­tors such as tourism, busi­ness, util­i­ty in­fra­struc­ture, re­new­able en­er­gy, and food se­cu­ri­ty, are ex­pect­ed to sup­port sus­tain­able growth, stim­u­late con­struc­tion ac­tiv­i­ty, and cre­ate jobs.

He said ef­forts to mod­ernise sys­tems to stream­line pro­cess­ing times and re­duce ad­min­is­tra­tive bur­dens will fur­ther en­hance the busi­ness en­vi­ron­ment and sup­port high­er pro­duc­tiv­i­ty. Ad­di­tion­al­ly, tar­get­ed train­ing pro­grammes and ca­pac­i­ty-build­ing ini­tia­tives will equip the work­force with the skills re­quired to thrive in emerg­ing in­dus­tries.

Greenidge said that the tourism sec­tor is poised for an­oth­er strong year in 2025, build­ing on its ro­bust per­for­mance in 2024.

“The de­mand for Bar­ba­dos’ tourism of­fer­ings dur­ing the win­ter sea­son re­mains ro­bust, with in­creased for­ward book­ings for the first quar­ter of 2025. Ad­di­tion­al­ly, cruise ship ac­tiv­i­ty is ex­pect­ed to ex­ceed the 2024 lev­el, with 34 more cruise calls sched­uled for 2025.”

He said these de­vel­op­ments are ex­pect­ed to sup­port growth in re­lat­ed sec­tors such as ac­com­mo­da­tion, trans­porta­tion, and en­ter­tain­ment, and al­so con­tribute sig­nif­i­cant­ly to for­eign ex­change earn­ings and job cre­ation across the econ­o­my.

Greenidge said that glob­al eco­nom­ic con­di­tions will sig­nif­i­cant­ly in­flu­ence Bar­ba­dos’ growth prospects.

The Jan­u­ary 2025 World Eco­nom­ic Out­look projects glob­al growth to sta­bilise at 3.3 per cent by year-end, dri­ven by ad­vanced economies such as the US, the Eu­ro Area, and Cana­da. Greenidge said that these de­vel­op­ments are ex­pect­ed to bol­ster de­mand for Bar­ba­dos’ goods and ser­vices, par­tic­u­lar­ly in tourism and trade.

“How­ev­er, risks such as slow­er glob­al growth, el­e­vat­ed in­fla­tion, and trade dis­rup­tions, es­pe­cial­ly in key mar­kets like the UK, could lim­it these ben­e­fits. Geopo­lit­i­cal ten­sions and the ris­ing fre­quen­cy of cli­mate-re­lat­ed dis­as­ters, fur­ther un­der­score the need to fur­ther build for eco­nom­ic re­silience.”

The  Cen­tral Bank Gov­er­nor said cli­mate re­silience and in­ter­na­tion­al part­ner­ships are vi­tal for sus­tain­able growth.

“Bar­ba­dos re­mains vul­ner­a­ble to cli­mate-re­lat­ed risks, in­clud­ing nat­ur­al dis­as­ters and ris­ing sea lev­els, which pose sig­nif­i­cant threats to key sec­tors like tourism and agri­cul­ture,” he said, adding that to mit­i­gate these risks, the gov­ern­ment is ad­vanc­ing cli­mate re­silience ini­tia­tives such as re­new­able en­er­gy projects, sus­tain­able tourism prac­tices, and in­vest­ments in dis­as­ter pre­pared­ness.

“The coun­try’s ac­tive en­gage­ment with mul­ti­lat­er­al in­sti­tu­tions and de­vel­op­ment part­ners pro­vides ac­cess to tech­ni­cal as­sis­tance, con­ces­sion­al fi­nanc­ing, and in­vest­ment op­por­tu­ni­ties. Ini­tia­tives like the debt-for-cli­mate swap and col­lab­o­ra­tions with glob­al cli­mate fund or­gan­i­sa­tions, demon­strate Bar­ba­dos’ com­mit­ment to ad­dress­ing cli­mate chal­lenges while pro­mot­ing sus­tain­able growth.

“Strength­ened re­la­tion­ships with key trad­ing part­ners and re­gion­al or­gan­i­sa­tions will fur­ther en­hance eco­nom­ic re­silience by im­prov­ing mar­ket ac­cess and fos­ter­ing new av­enues for in­vest­ment.”

Greenidge said do­mes­tic in­fla­tion is ex­pect­ed to slow, sup­port­ed by mod­er­at­ing glob­al com­mod­i­ty prices.

He said the 12-month mov­ing av­er­age in­fla­tion rate is pro­ject­ed to range be­tween 1.5 and 2.5 per cent for 2025 and 2026, dri­ven by eas­ing in­ter­na­tion­al food and en­er­gy prices.

“How­ev­er, glob­al risks such as ris­ing geopo­lit­i­cal ten­sions and dis­rup­tions to sup­ply chains, in­clud­ing the on­go­ing Red Sea cri­sis and Pana­ma Canal wa­ter short­ages, could lead to high­er freight costs.

“On the do­mes­tic front, un­favourable weath­er con­di­tions may fur­ther lim­it agri­cul­tur­al pro­duc­tion, po­ten­tial­ly in­creas­ing lo­cal food prices. The re­cent im­por­ta­tion of live­stock is ex­pect­ed to par­tial­ly mit­i­gate the im­pact of ris­ing costs on the dairy in­dus­try.”

The CBB Gov­er­nor said that the gov­ern­ment re­mains com­mit­ted to fis­cal and debt sus­tain­abil­i­ty and is ded­i­cat­ed to meet­ing fis­cal tar­gets through in­creased rev­enue and care­ful spend­ing.

He said gains in cor­po­ra­tion tax per­for­mance, along with the adop­tion of glob­al tax rules, pro­vide up­side po­ten­tial for rev­enues. These ef­forts are ex­pect­ed to en­able con­tin­ued in­vest­ment in in­fra­struc­ture and cli­mate re­silience, while al­so sup­port­ing ear­ly debt re­pay­ment. “Sus­tained eco­nom­ic growth and fis­cal sur­plus­es will dri­ve the debt-to-GDP ra­tio down­ward, to a tar­get of 60 per cent by fi­nan­cial year2035/36. The US Fed­er­al Funds Rate is fore­cast to de­crease in the short to medi­um term, po­ten­tial­ly lead­ing to re­duced in­ter­est rates on ex­ist­ing and pro­ject­ed ex­ter­nal debt.

“In the do­mes­tic mar­ket, op­por­tu­ni­ties for gov­ern­ment se­cu­ri­ties are ex­pect­ed to ex­pand, fos­ter­ing the de­vel­op­ment of a yield curve that in­forms in­vest­ment de­ci­sions by stake­hold­ers and in­vestors.”

Greenidge pre­dicts that fi­nan­cial sound­ness in­di­ca­tors will re­main strong, sup­port­ed by cred­it ex­pan­sion in key eco­nom­ic sec­tors.

He said con­tin­ued growth in con­struc­tion ac­tiv­i­ty and oth­er strate­gic in­vest­ments are ex­pect­ed to dri­ve cred­it ex­pan­sion, boost­ing over­all eco­nom­ic ac­tiv­i­ty.

“Banks and fi­nance com­pa­nies are pro­ject­ed to main­tain ro­bust cap­i­tal ad­e­qua­cy and liq­uid­i­ty lev­els, en­sur­ing sta­bil­i­ty with­in the fi­nan­cial sys­tem. As eco­nom­ic con­di­tions con­tin­ue to im­prove, the lev­el of non-per­form­ing loans is an­tic­i­pat­ed to de­cline fur­ther.”

But Greenidge warned that as Bar­ba­dos charts its course to­wards in­clu­sive and sus­tain­able eco­nom­ic growth, col­lab­o­ra­tion and in­no­va­tion will be crit­i­cal.

He said pub­lic and pri­vate sec­tor in­vest­ments will re­main cen­tral to achiev­ing the na­tion’s eco­nom­ic ob­jec­tives, fos­ter­ing re­silience, and cre­at­ing long-term pros­per­i­ty.

“Tourism and re­new­able en­er­gy sec­tors of­fer trans­for­ma­tive op­por­tu­ni­ties. The in­te­gra­tion of sus­tain­able prac­tices and op­er­a­tional ef­fi­cien­cy in tourism can en­hance vis­i­tor ex­pe­ri­ences and strength­en Bar­ba­dos’ po­si­tion as a pre­mier glob­al des­ti­na­tion.

“Sim­i­lar­ly, ac­cel­er­at­ing in­vest­ments in re­new­able en­er­gy in­fra­struc­ture will re­duce fos­sil fu­el de­pen­dence, gen­er­ate em­ploy­ment, and stim­u­late lo­cal in­dus­tries. By pri­ori­tis­ing in­no­v­a­tive so­lu­tions and lever­ag­ing pub­lic-pri­vate part­ner­ships, Bar­ba­dos can un­lock its full eco­nom­ic po­ten­tial and se­cure a fu­ture that is both in­clu­sive and re­silient,” the Cen­tral Bank Gov­er­nor told re­porters.

BRIDGETOWN, Bar­ba­dos, Jan 29, CMC

CMC/pr/ir/2025