Rebounding Tourism To Propel Economic Growth In Barbados, Despite Expected Global Slowdown  

 

  • Fitch forecasts 5.9% real GDP growth in Barbados in 2022, driven by the revival of the international tourism sector.  In 2021, the economy grew 5.0%, a revision from the previous estimate of 1.6% due to additional government data releases for 2021, which showed a faster recovery from the pandemic-induced recession than was expected.
  • Growth in 2022 will be driven primarily by a continued recovery in Barbados’ tourism sector. This will underpin real export growth of 9.5% in 2022, and 7.0% in 2023.
  • Private consumption will grow 5.5% in 2022 and 3.0% in 2023, from 8.4% in 2021, as a stronger tourism sector will continue to boost employment levels in the hospitality sector and drive household spending. As a result, Fitch expects unemployment will continue to moderate in the months ahead.
  • In 2023, it is forecasted that inflation will come down in the second half of the year, but it will still average 6.0% for the year as a whole. With elevated inflation in 2022 and the beginning of 2023, it is expected that private consumption will steadily slow in the quarters ahead.
  • Central banks in Barbados’s key tourism source markets are likely to continue raising interest rates aggressively to battle historically high inflation. Should economic conditions in these markets deteriorate more severely than expected, Barbados’s post-COVID economic recovery could stall.
  • Additionally, if slower global growth heavily impacts Barbados’s tourism sector, weaker growth would also likely delay the government’s push to bring down its debt in accordance with its IMF agreement, potentially forcing the government to make deeper spending cuts in the long term that limit the economy’s growth potential.

(Source: Fitch Solutions)