Barbadian Current Account Deficit Will Narrow In 2022 As Increased Tourism Drives Exports

• Barbados’ current account deficit will narrow to 2.8% of GDP in 2022, from 5.2% in 2021, as high vaccination rates in key source markets drive a rebound in overnight tourist arrivals and hence services exports.
• The services trade surplus will widen to 20.3% of GDP in 2022, from 15.6% in 2021, as overnight arrivals continue to rise. In the year through May, Barbados received 333,739 overnight arrivals, slightly below the 373,015 arrivals recorded in the same period in 2019, but well above the 28,829 received through May 2021. In the coming months, it is expected that arrivals will continue to increase as vaccination rates continue rising, restrictions are eased and aversion to international travel dissipates.
• Stronger domestic activity and higher commodity prices will result in a 12.3% goods import growth in 2022, pushing the goods trade deficit to 22.8% of GDP, from 23.9% in 2021, partially counteracting the effect of a wider services trade surplus.
• However, lower growth in its key source markets—US, UK, and Canada—will limit remittance receipts in the near term. The removal of the pandemic-era stimulus and rising inflation will cap the disposable incomes of Barbadians abroad, undermining inflows as income levels fall.

(Source: Fitch Solutions)