Central Bank hails lower debt, falling inflation, stronger fiscal balance  

Barbados recorded a fourth straight year of economic expansion in 2025, with the economy growing by 2.7 per cent as record-breaking tourism arrivals helped drive broad-based gains across key sectors, the Central Bank announced on Wednesday. 

Addressing a press conference at the bank’s Spry Street, Bridgetown headquarters to review the economy in 2025, Governor Dr Kevin Greenidge also disclosed that inflation — the rate at which prices rise — slowed by an average of 0.7 per cent over the 12-month period, while unemployment fell to 6.6 per cent from 7.1 per cent at the end of September the previous year.  

 “In terms of inflation, we continue to see an easing of pressures in 2025, as price pressures continue to moderate across various sectors,” he declared, adding that there were even price reductions in some areas such as clothing, utilities, household furnishings, transportation and recreational goods.  

 Dr Greenidge revealed that on the policy and stability side, government recorded a primary surplus of 3.3 per cent of gross domestic product (GDP), while the debt-to-GDP ratio fell to 94.6 per cent.  

 He said credit expanded from $9 billion to $9.4 billion, and commercial banks reduced their non-performing loans portfolio from 4.1 per cent to 3.6 per cent — the lowest level since June 2009.  

 The international reserves remained around $3 billion, even with a widening current account deficit resulting from higher imports and lower exports.  

 Turning to the reasons behind the unprecedented economic growth in 2025, the governor said: “Tourism continued to drive economic activity in 2025, with long-stay arrivals increasing by 3.3 per cent to just over 727,000 visitors. And this is the highest arrivals record we have had… any annual record for the entire period,” he reported.  

 “This growth was led by the US market. That expanded by 8.1 per cent, and accounted for about 80 per cent of the additional arrivals. The performance of the US market reflected additional flights from Boston, New York, Philadelphia and Atlanta. Similarly, increased airlift capacity from the CARICOM market contributed to that market expanding by 6.1 per cent.”  

 Ongoing marketing initiatives supported an increase in arrivals from Europe, while at the same time boosting arrivals from Canada by 3.5 per cent, Dr Greenidge told reporters.   

  “However, in the UK market, arrivals dipped by 5.9 per cent, and that is being reflected in reduced seating capacity in that market,” he said.  

  “The arrivals were reflected in the accommodation sector. In the hotel sector, the average occupancy rate went up by 1.3 percentage points and the average revenue per room increased by about 15 per cent. In the shared economy — that is, the Airbnb space — occupancy rose by about 0.7 percentage points. However, revenue per room declined by about 10 per cent, and we see that as hosts adjusting their rates to remain competitive within that space.”

  Dr Greenidge also reported that the cruise ship business did “marginally well” in helping to support the overall tourism performance.  

  “Despite having 12 fewer cruise calls, cruise visitors actually rose by just under one percentage point to about 546,000 arrivals, and that reflected higher occupancy within each vessel,” he said.  

  He explained that the broad-based growth saw a boost to agriculture (13.3 per cent), construction (9.2 per cent), business and other services (3.7 per cent), and wholesale and distribution trade (1.1 per cent), while manufacturing was flat.  

  “So, overall, the takeaway that I would leave for 2025 is that growth was balanced and resilient; it was supported by multiple sectors rather than concentrated in any one area.”