Moody’s Investors Services downgrades Barbados credit rating

Barbados Prime Minister Freundel Stuart

Moody’s Investors Services has downgraded Barbados’ credit rating to Ba1 from Baa3 citing the country’s lukewarm economy and rising government debt levels.

Standard and Poor’s lowered Barbados’ rating to junk in July to BB+.

The economy of Barbados grew by 0.6 percent in 2011 and 0.2 through September of this year, well below expectations, according to the New York-based ratings firm. The United Nations Economic Commission for Latin America recently projected the country’s GDP to improve in 2013 with a rate of 1 percent.

“Moody’s believes that the country’s growth prospects remain very limited due to its deteriorating competitiveness and declining productivity coupled with heavy dependence on tourism, particularly from the United Kingdom and the United States,” Moody’s said in a statement.

Over the last 10 years, Moody’s said, Barbados has grown at a compound average annual rate of just 1.2 percent, among the slowest for countries rated by the firm.

“While the worst appears to be behind Barbados both in terms of fiscal deficits and economic deterioration, Moody’s anticipates that the government’s deficits will remain large for the next few years and its debt levels will continue to rise, albeit at a slowing pace,” the statement added.