Barbadian Economic Growth Will Slow Further in 2025; Strong by Historical Standards

• Fitch Solutions maintains its forecast that real GDP growth in Barbados will slow from an estimated 6.3% in 2023 to 3.1% and 2.1% in 2024 and 2025, respectively.
• While Fitch’s outlook suggests a continued growth slowdown from 11.3% in 2022, it will remain strong by historical standards (growth averaged 0.0% between 2010 and 2019) and is underpinned by the continued expansion of the tourism sector as well as an upbeat outlook for private consumption.
• Of note, slowing inflation, alongside a continued recovery in the tourism sector, will provide tailwinds to private consumption in 2024. Price growth remains benign, coming in at just 1.2% year-on-year (YoY) in July 2024, and Fitch expects this to remain the case in the coming months thanks to a continued easing of global commodity prices.
• Combined with falling unemployment, Fitch believes that real household incomes are likely to perform well this year, boosting spending levels. Additionally, overnight stays are up 14.5% YoY to August and will continue to support direct (and indirect) job creation, boding well for consumer spending.
• That said, risks to the growth projections are to the downside. Should political tensions in the Middle East escalate and prompt a surge in global oil prices, this would feed into higher inflation in Barbados, blunting real incomes and constraining household expenditure. This would also likely limit growth in tourist arrivals.
• Moreover, severe weather conditions remain an ever-present risk to the Barbadian economy, with hurricanes posing a threat to both critical infrastructure and tourist arrivals. 

(Source: Fitch Solutions)