Tourism To Sustain Growth In Barbados Despite Rising Headwinds

• Fitch Solutions maintains its forecast that real GDP in Barbados will grow by 4.9% in 2023, down from an estimated 10.0% in 2022.
• The company’s core view remains that exports will be the primary driver of headline growth, contributing 4.3 percentage points (pp) to GDP in 2023, down from 8.5pp in 2022 as it expects activity to moderate as global demand for foreign travel softens.
• Nonetheless, the ongoing post-pandemic recovery in tourism will sustain growth above historical averages over the coming quarters, though momentum will fade amid headwinds from weaker global growth and elevated inflation.
• Preliminary data show GDP growth reached 6.4% y-o-y in Q123, a deceleration from 9.5% in Q422, and Fitch expects growth momentum will continue to wane over the coming quarters for reasons previously mentioned.
• Nonetheless, Fitch still expects growth will remain comfortably above the pre-pandemic average of 0.7% over 2015-2019, driven primarily by the ongoing recovery in tourism, which comprised around 30% of the total economy in 2019.
• The risks to the short-term outlook are toward the downside given Barbados' sensitivity to external price shocks, particularly if there is disruption to international travel and tourism. 

(Source: Fitch Solutions)