Economy ‘to grow again’ in 2026 despite external risks, says Central Bank governor

Barbados is set for another year of solid economic growth in 2026, the Central Bank has projected, even as Governor Dr Kevin Greenidge warns that global uncertainty, political tensions and climate-related factors could weigh on progress in the months ahead.

He told reporters at the bank’s City headquarters on Wednesday that the economy is expected to remain on a strong growth path – having recorded 2.7 per cent expansion in 2025 – the fourth consecutive year of improvement.  

“Real GDP is expected to expand between 2.5 per cent and 3 per cent in 2026, and then edge up to a medium-term growth rate of 3.5 per cent, given the current conditions,” Dr Greenidge announced while reviewing the performance of the economy last year.  

“That growth trajectory is largely underpinned by continued expansion in tourism, in business and other services, and in construction, both in the private and public sectors. Now, on the inflation side, things are tilted towards the lower spectrum of between one per cent and 2.5 per cent. So, we expect for this year, 2026, the moving average rate of inflation for the 12 months to be closer to the one, and then settle towards two per cent or 2½ into the medium term. 

“Lower global commodity prices,including energy prices, could dampen international price pressures as we import those. And from a domestic perspective, we have heightened demand we see pressures putting on particular services, which could eclipse or moderate the inflation rate upwards.”  

He gave an assurance that debt is expected to continue declining with continued economic expansion and rising primary surpluses, and that fiscal prudence would also contribute to the debt-reduction trend in the medium term.  

He said: “It’s well on its path, or even faster… we expect it towards 60 per cent by fiscal year 2035/36. As you know, that is the anchor of our BERT programme, and has been so from the beginning of 2018. This path creates sufficient space – necessary space – for the government to undertake priority investments, while at the same time safeguarding sustainability.”

However, the bank governor contended that with the outlook come risks – both on the upside and downside.  

“On the downside, you can get slower than expected global growth, and that can reduce the demand from our major markets, such as the USA, impacting our tourism. We could also see heightened global political tension, which we have seen recently, particularly in oil-producing regions, and that could trigger inflationary pressures through oil price spikes,” Dr Greenidge warned.  

“Rising global uncertainty, which we know and we see happening, could raise shipping costs and import prices. On the domestic front, particularly weather-related destruction, could affect our local food production. These all carry risks to the outlook.” 

But he said that on the upside, the country could benefit from stronger tourism performance, a faster roll-out of infrastructure projects – including Bim Pay, the pending digital payments system set to go into operation shortly – housing developments and renewable energy initiatives.  (EJ)