Economic Recovery To Reinforce Political Stability In Barbados
- In 2020, real GDP contracted by an estimated 17.9%, and unemployment averaged 27.0%. This elevated unemployment is the main driver behind Barbados’ score of 65.0 out of 100 in the ‘social stability’ subcomponent of Fitch’s Short-Term Political Risk Index (STPRI), its lowest subcomponent score in the index.
- Moving forward, Fitch Solutions forecasts that real GDP will rebound to 1.8% growth in 2021 and 4.0% in 2022 as the tourism sector re-opens, which the agency expects will lower unemployment to 14.0% in 2021 and 12.1% in 2022. An improving labour market will in turn reduce social stability risks.
- That being said, Barbados’ economic recovery will limit risks to social stability in the quarters ahead, while the ruling, centre-left Barbados Labour Party (BLP)’s significant legislative majority will boost policymaking. As a result, Fitch Solutions assigned Barbados a score of 80.0 out of 100 in its Short-Term Political Risk Index, which is above the Caribbean average of 70.7.
- Medium-term risks to Prime Minister Mia Mottley’s re-election prospects are the unpopular fiscal consolidation measures, which will likely be implemented in the quarters leading up to the May 2023 parliamentary elections.
(Source: Fitch Solutions)