Central Bank cuts 2025 growth forecast amid global economic pressures

The Central Bank of Barbados has lowered its growth projection for 2025 to 2.7 per cent, down from the 3.0 per cent forecast issued earlier this year, citing mounting global economic pressures and signs of slowing momentum in key sectors.

In its economic review for the first quarter of the year, the Bank reported that the economy expanded by 2.6 per cent between January and March, led primarily by tourism, construction, and business and professional services.

Governor Dr Kevin Greenidge described the domestic fundamentals as “solid”, but underscored that the Bank has revised its inflation forecast upward, now expecting the 12-month average rate to range between 1.7 and 3.5 per cent, compared to earlier projections of 1.5 to 2.5 per cent.

He attributed this to the potential impact of global trade tensions, shipping disruptions, and adverse weather conditions affecting food production.
“There are risks that could affect both prices and growth,” Greenidge noted as he presented the report.

He further pointed to uncertainties stemming from the ongoing US-China trade dispute and the possibility of renewed supply chain shocks.

Despite these risks, the Bank reported that international reserves remained healthy at $3.4 billion, or 32.4 weeks of import cover.
It also noted that unemployment had declined to 7.1 per cent by September 2024, based on data from the NIS claims, and that the government posted a primary surplus of $662.8 million, or 4.6 per cent of GDP.

Tourism continued to perform strongly, with long stay arrivals increasing by 2.4 per cent in the first quarter, led by a 13 per cent jump in visitors from the United States.

Cruise arrivals surged by 37 per cent over the same period. The Bank, however, noted that capacity in the sector may be nearing its limits.

Regarding the non-tourism economies, a mixed performance was reported. Manufacturing was flat, and agriculture continued to struggle, with declines recorded in vegetable, fruit, and milk production. Fish landings were also down by more than a third.

Greenidge noted that while the Bank remains watchful, it is not forecasting a recession at this stage.

However, he stressed the importance of accelerating structural reforms and continuing investment in emerging industries to build economic resilience. (SM)