BRIDGETOWN, Barbados, CMC – The Barbados economy, which expanded steadily during the first nine months of this year, is expected to strengthen with economic growth projected at 2.7 per cent at the end of 2025,” the Central Bank of Barbados (CBB) reported on Wednesday.
It said that the growth is underpinned by continued activity in tourism, construction, wholesale and retail trade, and business and other services.
CBB Governor, Dr. Kevin Greenidge, delivering the country’s economic review for the first nine months of the year, told reporters that growth had been recorded over the period, even as global trade tensions persisted and development in several advanced economies slowed.
He said real gross domestic product (GDP) increased by 2.7 per cent, led by tourism, agriculture, construction, and business and other services. Labor market conditions improved, with the unemployment rate at a record low of 6.1 per cent at the end of June, 1.6 percentage points below a year earlier, while jobless claims edged up 3.2 per cent.
The Central Bank Governor said that inflation eased as import costs fell and that the 12-month moving average rate slowed to 0.5 per cent by August, with smaller price increases for food, non-alcoholic beverages, and health, and lower prices for housing, utilities, furnishings, transport, and recreational and cultural services.
He said that the August point-to-point rate ticked up to 1.2 per cent on higher restaurant prices, but underlying inflation remained subdued.
The CBB predicts that growth momentum will strengthen and points to a clear medium-term path.
It said that over the medium term, real growth trends toward three per cent per year on the strength of tourism diversification, steady public and private investment in infrastructure and housing, expansion of the digital economy, and targeted productivity reforms.
“These drivers, together with resilient domestic demand and stable macroeconomic management, will keep Barbados on a durable growth path,” Greenidge said, adding that tourism, construction, and business services should continue to lead the next stage of expansion.
He said scheduled events, improved connectivity, and additional airline capacity from the United States, Europe, and the Caribbean Community (CARICOM) should lift long-stay demand. At the same time, high vessel occupancy and an active itinerary pipeline will support cruise traffic. Spillovers will benefit accommodation, dining, transport, and cultural services.
The CBB said that a solid investment project pipeline in transportation, utilities, housing, renewable energy, and water management is expected to sustain construction activity, and ongoing upgrades in technology and innovation should strengthen business and other services.
It said that digital transformation and productivity reforms are expected to sustain medium-term growth.
“Government and the private sector continue to scale digital infrastructure, modernize payments through BIMPAY, and expand online government services. Simplified business start-up requirements and skills development should raise efficiency and competitiveness, improving the ease of doing business and lifting potential output over the medium term.”
Greenidge said that global conditions have softened, yet Barbados is still supported by stable demand and easing inflation.
According to the October 2025 World Economic Outlook, global growth is projected to slow to 3.2 per cent in 2025 and 3.1 per cent in 2026, with Latin America and the Caribbean around 2.4 per cent in 2025 and 2.3 per cent in 2026. The IMF also projects global headline inflation near 4.2 per cent in 2025 and 3.7 per cent in 2026.
The CBB said that trade policy uncertainty and elevated tariffs keep risks tilted to the downside. Still, gradual disinflation and resilient consumption in major partners continue to support travel and external demand for Barbados.
Greenidge’s strong buffers, including international reserves of US$3.3 billion and a credible policy framework, help Barbados manage external shocks while protecting confidence and investment.
“Higher capital inflows to the public and private sectors, together with strong travel credits, offset import-related pressures and keep reserve coverage well above prudential norms,” he said, adding that reserve levels may ease as construction and job gains lift imports. Yet, coverage remains sufficient to meet debt service, essential import needs, and to cushion against external shocks.
Greenidge said domestic inflation is anticipated to remain low and stable. He told the local inflation rate declined markedly during the first eight months of 2025, tilting the year’s outturn towards the low end of the forecast range, at around 1 per cent.
He said increased oil production by OPEC members is signaling potential declines in oil prices for the remainder of the year and into early 2026, which could favorably influence domestic inflation. However, persistent geopolitical tensions in key oil-producing regions remain a significant downside risk.
Greenidge said that, in addition, tariffs recently passed by the U.S. Government on its trading partners are likely to transmit inflationary pressures to Barbados. Potential spikes in shipping costs and weather-related disruptions to local food production could also temporarily raise the inflation outlook.
“All considered, the 12-month moving average inflation rate is likely to settle near the lower end of the forecast range between 1.0 and 2.5 per cent by year-end. This relatively low inflationary environment will help preserve domestic purchasing power and support confidence in the economy.”
He said fiscal prudence and debt sustainability are central pillars of the Government’s public financial management strategy.
Greenidge said the Government continued to maintain substantive primary surpluses, aided by solid tax performance and prudent expenditure management.
“The focus remains on utilizing any year-end surplus to reduce public debt, while also supporting public investment. This approach aligns with Barbados’ broader growth strategy as outlined under the Barbados Economic Recovery and Transformation (BERT) program.”
Greenidge said BERT 2025 is expected to build on this foundation, advancing the Government’s ongoing reform agenda with renewed emphasis on state-owned enterprise (SOE) reform, productivity enhancement, and the transformation of both traditional and emerging economic sectors.
“These efforts bode well for accelerating growth and achieving the government’s long-term debt anchor of 60 per cent of GDP by the financial year 2035/36,” Greenidge added.
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