The Cen­tral Bank of Bar­ba­dos (CBB) Wednes­day said de­spite glob­al eco­nom­ic un­cer­tain­ties and the neg­a­tive con­se­quences of Hur­ri­cane Beryl, Bar­ba­dos has main­tained a steady path of eco­nom­ic growth and re­silience.

It said that the re­al gross do­mes­tic prod­uct (GDP) ad­vanced by 3.9 per cent dur­ing the first nine months of 2024, dri­ven by key sec­tors such as tourism, busi­ness ser­vices, and con­struc­tion.

CBB Gov­er­nor, Dr. Kevin Greenidge de­liv­er­ing the bank’s re­view of the lo­cal econ­o­my for the first nine months of this year, told a news con­fer­ence that in­fla­tion mod­er­at­ed, un­em­ploy­ment fell, and the coun­try’s ex­ter­nal po­si­tion re­mained ro­bust, marked by the high­est Sep­tem­ber in­ter­na­tion­al re­serves lev­el, equiv­a­lent to 31.2 weeks of im­ports of goods and ser­vices.

The CBB is pre­dict­ing that the Bar­ba­dos’ econ­o­my is set to main­tain its growth mo­men­tum through year-end, with re­al GDP ex­pand­ing by ap­prox­i­mate­ly 3.8 per cent.

“This ex­pan­sion will be dri­ven by on­go­ing pri­vate and pub­lic sec­tor in­vest­ments, par­tic­u­lar­ly in tourism and util­i­ty in­fra­struc­ture. Ad­di­tion­al­ly, the digi­ti­sa­tion of pub­lic and pri­vate op­er­a­tions is an­tic­i­pat­ed to en­hance ef­fi­cien­cies, re­duce costs, and boost pro­duc­tiv­i­ty across in­dus­tries. Work­force de­vel­op­ment ini­tia­tives, fo­cused on tech­ni­cal skills en­hance­ment, are al­so ex­pect­ed to strength­en eco­nom­ic re­silience,” it added.

Greenidge said strate­gic in­vest­ments and fis­cal dis­ci­pline have sup­port­ed eco­nom­ic sta­bil­i­ty.

The bank re­port­ed that high­er rev­enues from di­rect tax­es, par­tic­u­lar­ly cor­po­ra­tion and prop­er­ty tax­es, along with in­creased Val­ue-added tax (VAT) re­ceipts, have en­abled the Gov­ern­ment to boost pub­lic trans­fers and in­vest­ments in crit­i­cal sec­tors such as ed­u­ca­tion and in digi­ti­sa­tion ef­forts aimed at im­prov­ing pub­lic ser­vice de­liv­ery.

“Out­lays on in­no­va­tion, such as the es­tab­lish­ment of a new dig­i­tal in­no­va­tion and health cen­tre, have al­so been pri­ori­tised to strength­en Bar­ba­dos’ fu­ture growth prospects,” the CBB said, adding that gov­ern­ment’s fis­cal op­er­a­tions re­sult­ed in a sur­plus and re­duced the debt-to-GDP ra­tio.

It said a half-year (April to Sep­tem­ber) pri­ma­ry sur­plus of BDS$581.9 mil­lion (One Bar­ba­dos dol­lar=US$0.50 cents) or four per cent of GDP, con­tributed to a steady de­cline in the debt-to-GDP ra­tio, which now stands at 105.6 per cent.

“This achieve­ment re­flects Bar­ba­dos’ re­silience in man­ag­ing ex­ter­nal shocks while con­tin­u­ing to re­duce its re­liance on new debt. By con­trol­ling ex­pen­di­tures and di­rect­ing re­sources to­wards long-term growth ini­tia­tives, Bar­ba­dos has re­in­forced its abil­i­ty to nav­i­gate glob­al chal­lenges and se­cure sus­tain­able de­vel­op­ment,” Greenidge said.

He told re­porters that the Bar­ba­dos eco­nom­ic out­look is pos­i­tive, de­spite grow­ing geopo­lit­i­cal un­cer­tain­ty.

“Look­ing ahead, Bar­ba­dos’ econ­o­my is ex­pect­ed to con­tin­ue its pos­i­tive tra­jec­to­ry, with growth dri­ven by sus­tained ac­tiv­i­ty in tourism, con­struc­tion, and busi­ness ser­vices. While ex­ter­nal risks such as glob­al com­mod­i­ty price fluc­tu­a­tions and geopo­lit­i­cal un­cer­tain­ties re­main, the coun­try’s fo­cus on strate­gic in­vest­ments and fis­cal pru­dence is an­tic­i­pat­ed to sup­port fur­ther sta­bil­i­ty and re­silience.”

But, the CBB warned that while eco­nom­ic growth prospects re­main pos­i­tive, sev­er­al down­side risks could tem­per these pro­jec­tions.

It not­ed that the Oc­to­ber 2024 World Eco­nom­ic Out­look projects steady glob­al growth at 3.2 per cent, dri­ven by ad­vanced economies such as the Unit­ed States and Cana­da and emerg­ing mar­kets like Chi­na and In­dia.

“How­ev­er, slow­er-than-ex­pect­ed glob­al growth may re­duce ex­port de­mand and tourism from key source mar­kets. High air­line tick­et prices may al­so damp­en tourism de­mand, lim­it­ing the sec­tor’s growth. Ad­di­tion­al­ly, cli­mate-re­lat­ed risks re­main sig­nif­i­cant, as in­creased hur­ri­cane, flood, and storm ac­tiv­i­ty could dis­rupt trav­el, dam­age in­fra­struc­ture, and weak­en the agri­cul­tur­al sec­tor.”

Ac­cord­ing to the CDB, eco­nom­ic ac­tiv­i­ty and ro­bust per­for­mance across sev­er­al key sec­tors drove eco­nom­ic growth in the first nine months of the year.

Tourism, con­struc­tion, and busi­ness ser­vices led the ex­pan­sion, push­ing re­al GDP up by 3.9 per cent. Ac­tiv­i­ty in the non-trad­ed sec­tor grew across the board, for an av­er­age of 3.9 per cent, while chal­lenges in agri­cul­ture con­strained growth in the trad­ed sec­tor to 3.8 per cent. But, the bank said de­spite these hur­dles, the econ­o­my showed re­silience against both do­mes­tic and ex­ter­nal pres­sures.

It said that tourism re­mained a key dri­ver of growth, with sig­nif­i­cant in­creas­es in long-stay ar­rivals. Long-stay vis­i­tors in­creased by 12.9 per cent over the first nine months.

Al­though there was a slight de­cline in flights from the Unit­ed King­dom and Eu­rope dur­ing the third quar­ter, strong per­for­mance ear­li­er in the year, along with an in­crease in cruise ac­tiv­i­ty, off­set the slow­down.

The CBB said that ar­rivals from the US mar­ket surged by 32.5 per cent, ex­ceed­ing pre-pan­dem­ic lev­els (2017-2019 av­er­age) by 10.4 per cent, while Cana­di­an tourists reg­is­tered a 16.5 per cent in­crease. The CARI­COM mar­ket al­so record­ed sig­nif­i­cant gains, fur­ther con­tribut­ing to the sec­tor’s re­cov­ery.

The bank said high­er tourism de­mand boost­ed ho­tel oc­cu­pan­cy rates and rev­enues. The rise in long-stay ar­rivals boost­ed the ac­com­mo­da­tion sec­tor, where av­er­age room de­mand in­creased by 8.2 per cent, out­pac­ing the five per cent growth in avail­able rooms.

Cruise ship ac­tiv­i­ty al­so played a vi­tal role in the sec­tor’s re­cov­ery. For the first time since 2021, sum­mer cruise ar­rivals re­turned to the is­land, with in-tran­sit cruise vis­i­tors grow­ing by 27.7 per cent, reach­ing 377,340 by the end of Sep­tem­ber. The sec­tor record­ed 286 cruise calls dur­ing this pe­ri­od, an in­crease of 41 com­pared to the same time­frame in 2023, the bank said.

Greenidge said that price in­fla­tion in Bar­ba­dos eased in 2024, though ad­verse weath­er con­di­tions pushed up some food prices.

He said the point-to-point in­fla­tion rate fell to 0.7 per cent in Au­gust, down from 2.9 per cent a year ear­li­er. The 12-month mov­ing av­er­age in­fla­tion rate al­so mod­er­at­ed, drop­ping to 2.4 per cent from 3.4 per cent.

Low­er glob­al en­er­gy prices helped dri­ve this de­cline, along with re­duced costs for trans­porta­tion, com­mu­ni­ca­tion, and recre­ation. How­ev­er, ad­verse weath­er con­di­tions led to price in­creas­es for dairy prod­ucts, fruits, and veg­eta­bles, push­ing up do­mes­tic food prices. The CBB said de­spite the eas­ing of glob­al food prices, lo­cal agri­cul­tur­al short­ages kept up­ward pres­sure on these cat­e­gories. Do­mes­tic en­er­gy costs, by con­trast, mod­er­at­ed in line with de­clin­ing in­ter­na­tion­al fu­el prices, pro­vid­ing some re­lief to con­sumers.

Bar­ba­dos’ ex­ter­nal sec­tor im­proved in the first nine months of the year, as the cur­rent ac­count deficit con­tract­ed.

Greenidge said the deficit nar­rowed to five per cent of GDP, down from 9.5 per cent in the same pe­ri­od in 2023.

“High­er tourism rev­enues and in­creased cur­rent trans­fer cred­its con­tributed to this im­prove­ment, though these gains were off­set by a mar­gin­al­ly wider mer­chan­dise trade deficit. The coun­try’s gross in­ter­na­tion­al re­serves re­mained ro­bust, pro­vid­ing am­ple im­port cov­er.”

The Cen­tral Bank Gov­er­nor said that the high­er pri­ma­ry bal­ance re­duced gov­ern­ment’s gross fi­nanc­ing re­quire­ment.

Gov­ern­ment’s gross fi­nanc­ing re­quire­ment for the first half of the fi­nan­cial year 2024/25 amount­ed to BDS$187.3 mil­lion, rep­re­sent­ing 1.3 per cent of GDP, a sig­nif­i­cant de­cline from BDS$395.6 mil­lion or 2.9 per cent of GDP dur­ing the same pe­ri­od in the fi­nan­cial year 2023/24.

A high­er pri­ma­ry sur­plus of BDS$581.9 mil­lion, or four per cent of GDP) in 2024, up from BDS$294.5 mil­lion – 2.2 per cent of GDP – in the pri­or year, was the main fac­tor be­hind this re­duc­tion.

Greenidge said de­spite this, the to­tal fi­nanc­ing re­quire­ment for the pe­ri­od in­creased to BDS$769.2 mil­lion or 5.3 per cent of GDP, up from BDS$690.1 mil­lion or five per cent of GDP in 2023. ‘

He said this rise re­flect­ed high­er debt ser­vice oblig­a­tions, which reached BDS$702 mil­lion in 2024, an in­crease from BDS674.4 mil­lion in the cor­re­spond­ing pe­ri­od of 2023.

The gov­ern­ment’s in­ter­est pay­ments grew while amor­ti­sa­tion de­clined dur­ing the first half of the fis­cal year.

For­eign in­ter­est pay­ments in­creased by BDS$25 mil­lion, a re­sult of ex­ter­nal bor­row­ings from the pre­vi­ous fis­cal year. Ad­di­tion­al­ly, do­mes­tic in­ter­est ex­pens­es ex­pand­ed by BDS$18.4 mil­lion, from the sales of the Bar­ba­dos Op­tion­al Sav­ing Scheme Plus (BOSS+) se­cu­ri­ties and trea­sury bills, as well as the step-up in­ter­est rate fea­ture of the re­struc­tured do­mes­tic bonds.

Do­mes­tic amor­ti­sa­tion dropped by BDS$24.4 mil­lion com­pared to a year ago, when do­mes­tic pay­ments were high­er due to the re­pay­ment of Se­ries H bonds to the Cen­tral Bank. The com­mence­ment of prin­ci­pal pay­ments for a pol­i­cy-based loan, ex­pand­ed for­eign amor­ti­sa­tion by BDS$8.7 mil­lion.

The CBB said that con­di­tions in the fi­nan­cial sec­tor re­mained sta­ble, ac­tive­ly sup­port­ing eco­nom­ic ac­tiv­i­ty.

It said cred­it bal­ances saw mod­est ex­pan­sion, ac­com­pa­nied by con­tin­ued im­prove­ments in cred­it qual­i­ty. To­tal de­posits grew, dri­ven by ac­tiv­i­ty in the glob­al busi­ness sec­tor and in­creased tourism out­put, which con­tributed to high­er sys­tem liq­uid­i­ty.

“Prof­itabil­i­ty among banks and fi­nance com­pa­nies de­clined due to small­er re­duc­tions in loan loss pro­vi­sions and low­er net in­ter­est in­come, re­spec­tive­ly. De­spite this, cap­i­tal ad­e­qua­cy ra­tios (CARs) for both banks and fi­nance com­pa­nies re­mained well above the reg­u­la­to­ry min­i­mum, un­der­scor­ing the sec­tor’s re­silience,” the CBB not­ed.

The CBB said that the fi­nan­cial sec­tor is fore­cast­ed to re­main sta­ble through 2024, with ro­bust cap­i­tal ad­e­qua­cy lev­els.

“Cred­it is an­tic­i­pat­ed to grow, un­der­pinned by in­creased ac­tiv­i­ty in the re­al es­tate mar­ket and busi­ness in­vest­ment. Loan delin­quen­cy rates are ex­pect­ed to de­cline fur­ther amid low­er com­mod­i­ty prices and sus­tained eco­nom­ic ac­tiv­i­ty. While liq­uid­i­ty in the fi­nan­cial sys­tem should re­main high, an ex­pect­ed in­crease in im­ports could mod­er­ate de­posit growth in the last quar­ter,” the CBB added.

BRIDGETOWN, Bar­ba­dos, Oct 30, CMC –

CMC/ag/ir/2024