Barbadian Economic Growth Will Slow Further In 2025

• Real GDP growth in Barbados was 3.6% in 2024, up from a previous 1.8% estimate, owing to lower inflation than expected and strong tourism receipts as estimated by Fitch Connect.
• In 2025, real GDP growth of 2.5% is forecasted up from 1.8% previously, reflecting the view that the continued strong performance of tourism will bolster the labour market and consumer spending.
• Nevertheless, headline real GDP growth will remain subdued, overall. While tourist arrivals will be strong in 2025, emerging capacity constraints in the sector will prevent growth from remaining as robust. The Barbados Hotel and Tourism Agency expects hotel capacity to be nearly 100% in the first months of 2025. Thus, a high base means that tourism’s impact on growth will be more muted, without a further expansion in accommodation, which will take time to come online.
• Additionally, fiscal consolidation will prevent faster growth, with severe weather events or a further rise in geopolitical tensions posing downside risks to Fitch’s outlook.
•  On the upside, a lasting peace in Gaza, the ceasefire in Ukraine, and reduced Israel-Iran tensions could lower oil prices globally, feeding through into lower inflation in Barbados.

(Source: Fitch Connect)