Central Bank of Barbados' Review of Barbados' Economy in 2024

Barbados achieved robust economic growth in 2024, marking three consecutive years of expansion and surpassing the estimated global growth rate. Real GDP increased by 4 percent, driven by strong performances in business services, tourism, construction, and retail trade sectors. Inflation continued its downward trajectory due to stabilising price pressures, while a declining unemployment rate and less jobless claims highlighted improvements in labour market conditions. These results underscore the positive effect of targeted economic reforms and provide a solid platform for future sustainable growth.

Barbados registered a record level of gross international reserves—$3.2 billion, equivalent to 31.2 weeks of import cover. This reflects strong net foreign exchange inflows from higher tourism receipts and tax revenue generated by the global business sector.

The fiscal position improved significantly during the first three quarters of FY2024/25. Government’s operations resulted in an overall surplus of $224.8 million (1.5 percent of GDP), compared to a deficit of $7.7 million (0.1 percent of GDP) in the previous period. Similarly, the primary surplus expanded by $278.8 million to reach $774.1 million (5.3 percent of GDP), driven by broad-based revenue growth and prudent expenditure management. These fiscal gains, along with the strong economic growth, contributed to a reduction in the debt-to-GDP ratio, which fell to 103 percent, down from 109.8 percent at the end of 2023. 

The financial sector remained stable, further bolstering economic resilience. Declining non-performing loans (NPLs), robust capital buffers, and ample liquidity supported stability across deposit-taking institutions (DTIs). These positive outcomes reinforced the sector’s capacity to withstand shocks and laid a strong foundation for sustainable economic growth heading into 2025. 

Barbados’ economy is poised for sustained growth, despite external uncertainties. Real GDP is expected to increase by 3 percent in 2025, driven by continued expansions in tourism, construction and business services, along with investments in renewable energy and digital infrastructure. Inflation is projected to remain low, stabilising around 2 percent as global commodity prices ease. The Government’s fiscal strategy aims to further reduce the debt-to-GDP ratio, targeting below 100 percent by 2026. However, risks remain from potential global economic slowdowns, climate-related events, and geopolitical tensions, which could impact trade, tourism, and commodity prices. Nevertheless, Barbados’ strong reserve position and ongoing reforms provide a buffer, supporting resilience and sustainable development.