BRIDGETOWN, Barbados – Barbados maintained its economic growth momentum in the first quarter of this year, with real gross domestic product (GDP) increasing by an estimated 2.6 per cent,, the Governor of the Central Bank of Barbados (CBB), Dr. Kevin Greenidge, said Wednesday.
Governor of the Central Bank of Barbados, Dr. Kevin Greenidge, speaking during the review of the Barbados economy for the first three months of 2025 (CMC photo)In a review of the island’s economic performance in the first quarter of 2025, the Central Bank Governor said that the current economic situation was led by strong performances in tourism, business services and construction.
He said inflation continued its downward trend despite elevated global trade tensions. “Unemployment claims fell during January and February, but temporary hotel closures in March, linked to major renovation projects, reversed this gain. Economic growth, together with stronger fiscal outcomes for financial year 2024/25, contributed to a further reduction in the debt-to-GDP ratio,” Greenidge told reporters.
He said that the government met its fiscal targets for the financial year 2024/25 supported by stronger revenue collections and controlled spending.
“The primary surplus reached BDS$662.8 million (One BDS$=US$0.50 cents), or 4.6 per cent of GDP, for the fiscal year. Corporation tax collections increased significantly, reflecting structural reforms and improved corporate profitability. Despite higher capital outlays and interest costs, the fiscal deficit narrowed to BDS$87.1 million, or 0.6 per cent of GDP.”
The Central Bank Governor said that the financial system remained stable and continued to support credit growth. He said capital buffers remained well above regulatory requirements, non-performing loans (NPLs) declined, and liquidity levels stayed elevated.
Credit to businesses and households increased, supported by strong deposit growth, ample liquidity, and sustained profitability in the banking sector, Greenidge said.
He said traded sector activity led economic growth in the first quarter with the real GDP growth driven by expansions in tourism, business services, and construction. The traded sector registered growth of four per cent, supported by strong cruise and long-stay visitor arrivals, while agricultural output declined due to adverse weather.
The non-traded sector expanded by 2.4 per cent, reflecting continued investment by both private and public sectors.
The Central Bank Governor said that long-stay performance strengthened, supported by key source markets.
“Long-stay arrivals increased by 2.4 percent, with the United States market recording a 13 per cent increase, supported by expanded service from Boston and New York as well as new routes from Atlanta and Philadelphia.
“European arrivals climbed by 13.9 per cent, aided by targeted marketing efforts, while arrivals from Canada and the CARICOM market had modest growth of 1.4 and 2.9 perc ent, respectively. Lower seating capacity from the United Kingdom contributed to a 7.2 per cent decline in arrivals from that market,” Greendige said as he reviewed the performance of the tourism sector during the first three months of this year.
He said hotels recorded their highest quarterly revenue earnings since the first quarter of 2008, driven by strong winter demand.
A 2.3 per cent reduction in available hotel stock, due to ongoing renovations by major tourism operators, helped push occupancy rates higher,” Greenidge said, adding that average hotel occupancy rose by 3.5 percentage points to 80.5 per cent, while average daily rates increased by 18.4 per cent, lifting revenue per available room (RevPAR) by 23.8 per cent year-on-year.
He said in the sharing economy, occupancy improved by 4.3 percentage points to 73.9 per cent, but lower pricing led to a 2.2 per cent decline in RevPAR.
The Central Bank Governor said cruise tourism reached a historic peak with in-transit cruise passenger arrivals increasing by 37.1 per cent to reach 385,468 visitors, the highest level on record for a first quarter.
He said total cruise calls numbered 225, consistent with the same period in 2024. Compared to pre-pandemic levels, cruise passenger arrivals expanded by 32 per cent, reinforcing the sector’s robust recovery,” Greenidge added.
Going forward, the Central Bank Governor said that the real GDP growth for 2025 is projected at 2.7 per cent, revised down from the three per cent forecast at the start of the year.
“Despite solid first-quarter momentum, global headwinds warranted a modest downward adjustment. Growth is expected to be led by tourism, construction, and business services, although weaker global conditions and ongoing trade tensions present downside risks,” Greenidge said, adding that nonetheless, Barbados’ domestic fundamentals remain solid and should continue to support moderate expansion.
He said fiscal measures introduced in the 2025 national budget are expected to support growth and resilience.
The temporary removal of value added tax (VAT) and import duties on inputs for restaurants and cookshops, along with food and beverage concessions for hotels, should reduce operating costs and stimulate consumption.
“Climate-resilience initiatives in agriculture, including vertical farms and broiler tunnels, aim to enhance food security. Investments in technological upgrades and public-sector modernization should improve productivity.”
Greenidge said amendments to the Co-operative Societies Act, allowing credit unions to invest in renewable energy, real estate, and tourism, are expected to broaden domestic investment channels. He said training and capacity-building initiatives will help equip the workforce for a rapidly evolving global economy.
The Central Bank said that tourism is expected to remain a key growth driver, although risks remain.
Greenidge said that event-driven demand from Crop Over and international sporting events is likely to sustain long-stay arrivals, while increased airlift and seven additional cruise calls should bolster overall activity.
“However, economic uncertainty in key source markets, particularly the US, may dampen tourism spending. The sector will continue to play a central role in foreign exchange earnings and broader economic performance.”
Greenidge said global trade-related developments could weigh on Barbados’ economic prospects.
The April 2025 World Economic Outlook lowered global growth projections from 3.3 per cent to 2.8 per cent, reflecting slower expansions in major economies including the US, United Kingdom, Canada, and China.
“Rising trade tensions, particularly broad-based tariffs and job losses in the US, threaten to dampen consumer demand, with potential spillovers for Barbados through reduced tourism, exports, and remittances.
“Given the country’s reliance on US travelers and imports, these risks remain material. However, recent developments have helped mitigate some concerns: Caribbean countries have secured exemptions from proposed US port fees on Chinese-built vessels, and a 90-day pause on most global tariffs offers a temporary reprieve,” Greenidge told reporters.
He said that the inflation forecast for 2025 has been revised upward to between 1.7 and 3.5 per cent.
“Barbados remains exposed to imported inflation, particularly through food and fuel sourced from the US. Although recent tariffs have been delayed, pass-through effects are still expected to place upward pressure on consumer prices.
“Inflation could also re-emerge if shipping fees are reinstated, though the Caribbean’s exemption from Chinese-built vessel port charges has eased that risk. Local food prices remain sensitive to weather variability and global commodity trends, despite continued investment in climate-resilient agriculture.”
Greenidge told reporters that international reserves are projected to increase modestly in 2025, supported by tourism receipts and private investment. He said while the current account deficit is expected to widen, continued inflows from travel and tourism-related capital projects should support further reserve accumulation.
“However, growth in reserves may slow compared to 2024. Close monitoring of external conditions, particularly US demand, interest rates, and shipping costs, will be essential to safeguarding external stability.”
He said fiscal planning for the financial year 2025/26 focuses on maintaining surpluses and reducing debt.
“With the conclusion of its second IMF-supported program, Government is targeting a primary balance of 4.4 per cent of GDP, following the 4.6 per cent achieved in financial year 2024/25,” Greenidge said, adding that a new concessions platform is expected to strengthen tax administration and reduce leakages.
He said planned amalgamations of state-owned enterprises should enhance efficiency and lower transfers over time.
“The rollout of a new public-private partnership framework will support infrastructure delivery while mobilizing private capital,” Greenidge said, adding that the financial sector is expected to remain resilient.
He said credit to the private sector is projected to increase steadily, supported by ongoing labor market improvements. Banks and finance companies are expected to maintain robust capital buffers, while liquidity levels should remain elevated. Financial stability indicators continue to point to a healthy and sound system.
“Barbados is poised to meet its medium-term goals, but the moment demands bold, deliberate action. The home-grown Barbados Economic Recovery and Transformation (BERT) programme, along with the “Investment in Prosperity and Resilience” plan, continues to chart a path toward inclusive, climate-conscious growth. “
Greenidge said key priorities, ranging from population ageing and crime to food security and supply chain resilience, require sustained regional collaboration and innovation.
“As the global landscape grows more fragmented, Barbados must remain anchored in its values of discipline, unity, and strategic foresight.
“Now is the time to invest: in ourselves, in our productive capacity, in the next generation, and in the projects that will define our economic future. This is not only an opportunity, but a responsibility, to rise above division, lead with intention, and shape a resilient and distinctly Barbadian future,” the Central bank Governor added.
