Continuing Tourism Rebound To Narrow Barbados' Current Account Deficit In 2024

• Barbados’ current account deficit is expected to narrow from an estimated 8.4% of GDP in 2023 to 6.7% in 2024, normalising after double-digit deficits in 2021 and 2022. The narrower current account deficit is likely the product of a wider services trade surplus on the back of an ongoing tourism recovery. 
• The country’s ongoing tourism recovery is expected to continue next year, even as growth in source markets slows, while domestic demand should drop off somewhat in part due to fiscal consolidation.
• Arrivals data from the UN World Tourism Organization (UNWTO) shows that 2023 is on track to be the best year for the sector since 2019. Arrivals through September are up 18.7% YoY, though they are still roughly 15.0% below the total at the same point in 2019.
• Fitch expects arrivals to continue to normalise in 2024. However, the entity noted that upward momentum will probably be capped by slower growth in the UK, US, and Canada, which account for the vast majority of arrivals.
• Nonetheless, Fitch sees minimal risks to Barbados’ external stability moving forward, given solid reserves and the country’s good relationship with the IMF.

 (Source: Fitch Solutions)