Barbados economy grew by more than 4% in nine months of 2023

Barbados’ economy expanded by 4.4 percent in the first 9 months of this year, the largest nine month expansion since 2006, excluding the pandemic recovery period, the Central Bank of Barbados (CBB) reported on Friday.

In its Review of the Barbados Economic Performance January to September 2023, the CBB said this performance also accounts for the 10th consecutive quarter of economic growth.

“Broad-based growth boosted tax collections, improved labor market conditions, reduced the debt-to-GDP ratio, narrowed the trade deficit, increased foreign reserve levels, and improved credit quality as well as bank profitability,” the central bank said.

Central bank Governor, Kevin Greenidge, told reporters that the consistent economic expansion over the past 10 quarters demonstrates that Barbados is on a sustainable growth path.

He said after increasing by 13.8 percent in 2022, economic growth is projected to moderate to around 4.5 percent in 2023 which still surpasses pre-pandemic levels.

“The upcoming winter season, bolstered by events and improved air access, is expected to be very good for tourism, although high ticket prices could pose a challenge. The increase in tourism will spill over to other sectors, including distributive trade and transportation. Major construction projects slated for late 2023 will also contribute to the economy’s expansion and employment generation.”

The CBB said that forward bookings and increased seating capacity also bode well for the winter tourism season.

Increased airlift into the island-nation should bolster arrivals with the opening of a direct link to the Cayman Islands permitting more access from the United States. Airline ticket prices, however, are well above pre-pandemic levels and remain one of the downside risks to the full recovery in visitor numbers.

The CBB said that inflation is expected to moderate in the medium term in line with recent international commodity price declines. Domestic inflation should fall to 5 percent or below by the end of the year given price declines in cereals, vegetable oils and dairy products.

However, the contribution of crude oil prices to the slowing inflation rate for the remainder of the calendar year may not be maintained due to global oil production cuts by members of the Organization of Petroleum Exporting Countries and others (OPEC+) grouping.

Greenidge warned that among the downside risks to the economic outlook include a possible slowing of growth for Barbados’ key trading partners and rising food and commodity prices. He said while the recent World Economic Outlook projects minimal risks to global growth from the China slowdown, a deeper-than-anticipated slowing in the Chinese economy could have significant spillovers to other advanced economies and by extension the Barbados economy via reduced capital and tourism flows.

“Similarly, heightened global geopolitical tensions, including an intensified Russia/Ukraine war and the Israeli–Palestinian conflict along with weather-related shocks, could lead to higher inflation stemming from rising international food and commodity prices.”

Greendige said more frequent and intense local weather events could dampen domestic food production and exacerbate inflationary pressures. -(CMC)