The economy is set for a significant boost, with the Central Bank of Barbados forecasting an annual average increase in real GDP of three per cent in the short to medium term.
Governor Dr Kevin Greenidge unveiled this optimistic outlook during his 2024 economic review, highlighting key sectors poised for growth and potential challenges ahead.
He also cautioned that this projection hinges on continued investment by both private and public sectors, as well as ongoing improvement in productivity and competitiveness.
“Investments in key sectors such as tourism, business, utility infrastructure, renewable energy and food security, are expected to support sustainable growth, stimulate construction activity and create jobs,” the central bank boss stated.
“Efforts to modernise systems to streamline processing times and reduce administrative burdens, will further enhance the business environment and support higher productivity.”
Additionally, targeted training programmes and capacity-building initiatives will equip the workforce with the skills required to thrive in emerging industries, Dr Greenidge advised.
He reported that the tourism industry is poised for another strong year in 2025, building on last year’s robust performance.
The senior economist said demand for Barbados’ tourism offerings during the winter season remains high, with increased forward bookings for the first quarter of this year.
The governor said cruise ship activity is also anticipated to exceed the 2024 level, with 34 more cruise calls scheduled for this year.
He suggested that these developments are expected to support growth in related sectors such as accommodation, transportation and entertainment, and contribute significantly to foreign exchange earnings and job creation across the economy.
“Global economic conditions will significantly influence Barbados’ growth prospects,” Dr Greenidge warned. “The January 2025 World Economic Outlook projects global growth to stabilise at 3.3 per cent by year-end, driven by advanced economies such as the USA, the Euro area and Canada.”
He contended that this situation is expected to bolster demand for the island’s goods and services, particularly in tourism and trade.
“However,” the bank head argued, “risks such as slower global growth, elevated inflation, and trade disruptions – especially in key markets like the UK – could limit these benefits.”
On the outlook for inflation, Dr Greenidge forecasts that it is expected to slow, supported by moderating global commodity prices.
He explained that the 12-month moving average inflation rate is projected to range between 1.5 per cent and 2.5 per cent for 2025 and 2026, driven by easing international food and energy prices.
However, the governor warned that global risks such as rising geopolitical tensions and disruptions to supply chains, including the ongoing Red Sea crisis and Panama Canal water shortages, could lead to higher freight costs.
On the domestic front, Dr Greenidge identified unfavourable weather conditions as a factor that may further limit agricultural productivity, potentially increasing food prices.
“The recent importation of livestock,” he pointed out, “is expected to partially mitigate the impact of rising costs on the dairy industry.”
On the debt side, he said the government is committed to fiscal and debt sustainability.
“The government is dedicated to meeting fiscal targets through increased revenue and careful spending. Gains in corporation tax performance, along with the adoption of global tax rules, provide upside potential for revenues,” he said.
Dr Greenidge maintained that financial soundness indicators will remain strong, supported by credit expansion in key economic sectors.
He indicated that continued growth in construction and other strategic investments is expected to drive credit expansion, boosting overall economic performance.
Dr Greenidge said that as Barbados charts its course towards inclusive and sustainable economic growth, collaboration and innovation will be critical.
He advised that public and private sector investments will remain central to achieving the nation’s economic objectives, fostering resilience and creating long-term prosperity. (EJ)
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