Visitor arrivals, cruise traffic boost foreign exchange earnings

Economy expands 2.7 per cent as unemployment hits record low.

The Barbados economy grew steadily over the first nine months of 2025, with tourism, agriculture and construction boosting output and unemployment falling to its lowest level on record, the Central Bank reported on Wednesday.

At a press conference to review the island’s economic performance for the third quarter, Central Bank Governor Dr Kevin Greenidge said the growth was steady even as global trade tensions persisted and economic expansion in several advanced economies slowed.

Gains in key industries

Real GDP increased by 2.7 per cent, led by tourism, agriculture, construction, and business and other services. Labour market conditions improved, with the unemployment rate at a record low of 6.1 per cent at end-June, 1.6 percentage points below a year earlier, while jobless claims edged up 3.2 per cent, Dr Greenidge told reporters at the Courtney Blackman Grande Salle of the Bank.

“Inflation eased as import costs fell,” he added. “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. The August point-to-point rate ticked up to 1.2 per cent on higher restaurant prices, but underlying inflation remained subdued.”

The governor reported that the country’s external position remained robust on strong tourism receipts and higher long-term financing.

“International reserves measured $3.3 billion at end-September, as increased travel credits and capital inflows to both the public and private sectors offset a wider merchandise deficit, a larger income deficit, and lower receipts from the international financial business sector,” he said.

“Higher tax revenues, particularly from corporations, outpaced spending on wages and salaries, goods and services, and capital projects. The primary surplus reached $574.1 million (3.8 per cent of GDP), while the fiscal surplus rose to $227.1 million (1.5 per cent of GDP). The debt-to-GDP ratio declined by 2.9 percentage points to 100.1 per cent at end-September.”

He also explained that the broad-based growth extended across both traded and non-traded sectors in the first nine months of the year.

According to Dr Greenidge: “Higher tourism activity and stronger agriculture drove traded output, while construction, wholesale and retail trade, and business and other services led gains in the non-traded sector.

Manufacturing recorded gains in food processing and non-metallic minerals alongside declines in beverages and chemicals. Agriculture recorded stronger root crops and fruit and vegetable harvests, which offset lower milk output and reduced fish landings. Together, these developments lifted real GDP by 2.7 per cent over the period.”

Tourism boom

Detailing the performance of tourism, he said that increased airlift, marketing campaigns and cultural events boosted visitor arrivals.

“During January to September 2025, long-stay arrivals rose 5.5 per cent to 537,897. The United States led growth, supplying approximately 36 per cent of visitors and increasing 12 per cent as airlines added flights from Boston, New York, Philadelphia and Atlanta. Europe increased 15.5 per cent with demand supported by ongoing marketing, and CARICOM markets grew 8.2 per cent on added service by Caribbean Airlines and InterCaribbean Airways,” the governor shared.

“Arrivals from the United Kingdom and Canada fell 2.6 per cent and 1.1 per cent respectively because carriers reduced seating capacity. Major cultural events, including Crop Over and CARIFESTA, reinforced summer demand.”

In the press conference, which included economics students at the University of the West Indies, Cave Hill, the governor said that accommodation and visitor spending grew alongside the rise in arrivals.

The heightened demand lifted average hotel occupancy by 2.2 percentage points during the third quarter of 2025, with average revenue per available room (RevPAR) increasing by 16.4 per cent as stronger bookings and higher room rates improved performance across properties. In the sharing economy, occupancy climbed four percentage points, while RevPAR fell 4.2 per cent because hosts lowered daily rates to attract price-sensitive travellers.

Cruise arrivals rose, reflecting increased vessel occupancy rates, with in-transit cruise passenger arrivals climbing 31.5 per cent to 496 256 visitors during the first nine months of this year.

Dr Greenidge continued: “Higher vessel occupancy offset an 8.4 per cent decline in cruise calls to 262, as ships operated with larger passenger loads. Based on data up to July, Barbados recorded the strongest growth in cruise visitors in the Caribbean, increasing by 33.5 per cent and surpassing other reporting countries within the period, which collectively expanded by 5.1 per cent.”

The Central Bank also announced that tourism industry growth translated into higher output and broader economic gains, and that the combined increase in long-stay and cruise visitors lifted tourism value-added by nine per cent during the review period.

He added: “Visitor spending rose on stronger arrivals, higher hotel occupancy, and longer average stays, while airlift improvements supported the flow of passengers through Grantley Adams International Airport. The sector remained the main driver of foreign exchange inflows, reinforcing the growth in reserves and sustaining employment across hospitality and supporting industries.”

Record low joblessness

Turning specifically to the performance of the labour market, Dr Greenidge said the unemployment rate fell to 6.1 per cent at end-June, the lowest on record, marking a fifth consecutive quarterly decline.

“Agriculture, utilities, tourism, construction, transportation and storage, and finance and other business services drove the improvement. Jobless claims rose 3.2 per cent in January to September but remained below the historical average. The inactive adult population declined by 800 persons as fewer individuals retired or stayed in school.“

Construction and business and other services drove gains in the non-traded sector, which grew by 2.2 per cent in the first three quarters of 2025 as construction increased by 6.1 per cent across private hotel, residential and commercial projects, alongside public investments in infrastructure and cultural facilities, according to the Central Bank.

emmanueljoseph@barbadostoday.bb