Barbados holds $3.4bn reserves as inflation, global trade fears loom

The Barbadian economy grew by 2.6 per cent in the first quarter of 2025, surpassing forecasts and driven by a historic surge in cruise tourism, according to the Central Bank of Barbados’ latest economic review. But full-year growth projections have been revised down due to global uncertainties.

Governor Dr Kevin Greenidge, speaking at Wednesday’s press briefing, credited the “record performance” in cruise arrivals-up 37 per cent and accounting for over 100 000 additional visitors-as a key driver of the stronger-than-anticipated start to the year.

“The 2.6 [per cent growth] is actually slightly above our expectation for the first quarter,” Greenidge said, while cautioning that the external environment remains volatile, particularly given global trade tensions and a decelerating US economy.

He noted, however, that despite the encouraging start, the Central Bank has revised its full-year growth projection downward to 2.7 per cent, from the 3.0 per cent forecast issued earlier this year.

Greenidge defended the revised figure as “realistic,” pointing to strong tourism bookings, the return of renovated hotel stock, and continued investment activity.

“The 2.7 [per cent] is not optimistic. It’s very realistic. Given that we have very strong bookings, an active event calendar and major properties reopening… the fundamentals are strong,” he said.

“Prior to all of this, we have put our house in order so to speak. Many countries still have not done that… Once we stick to what we’re doing, continue investing, that growth is attainable and very realistic.”

The report highlighted robust activity in tourism and construction, as well as ongoing momentum in business and professional services.

On the other hand, it also flagged mixed performances in the real economy, noting that manufacturing was flat, while agriculture struggled with weather-related declines-particularly a 34.5 per cent fall in fish landings.

Inflation, which fell to 0.9 per cent in March, is also expected to rise in the coming months, with a revised 2025 inflation forecast upward to a range of 1.7 to 3.5 per cent, with the Bank citing potential global supply disruptions and domestic food production challenges.

However, the governor pointed out that despite the shifting forecasts, Barbados’ external position remains strong. Reserves stood at $3.4bn, providing 32.4 weeks of import cover, with the government also recording a primary surplus of $662.8m for the 2024/25 fiscal year, or 4.6 per cent of GDP.

The report further noted that, based on claims filed with NIS, unemployment declined to 7.1 per cent as of September 2024.

Responding to concerns about potential fallout from ongoing trade wars and the unpredictability of the international economic climate, Greenidge maintained that the Bank is not projecting a recession, even as global institutions raise concerns about slowing growth in key partner economies.

“There’s no way that you will be in recession and still see the kind of foreign bookings and market performance we’re seeing,” he said. (SM)

Key takeaways from Central Bank Q1 2025 economic review

– GDP Growth: 2.6%

– Revised 2025 Growth Forecast: 2.7% (down from 3.0%)

– Cruise Arrivals: +37% (Record-breaking performance)

– Long-Stay Arrivals: +2.4% (U.S. market up 13%)

– Construction: Continued expansion due to public

and private investment

– Manufacturing: Flat (-0.1%)

– Agriculture: Fish landings down 34.5%;

mixed results elsewhere

– Unemployment: 7.1% (as of September 2024)

– International Reserves: $3.4 billion

(32.4 weeks’ import cover)

– Inflation (12-month average): 0.9%

– Revised Inflation Outlook: 1.7% to 3.5%

– Primary Surplus: $662.8 million (4.6% of GDP)

– Gross Public Debt-to-GDP: 102.8%