The Central Bank of Barbados published an updated 2025 macroeconomic outlook, revising projected real GDP growth down to 2.7% from the 3% forecast at the start of the year and raising the inflation forecast to 1.7–3.5%. The update attributes the growth downgrade to a weaker external environment and trade-related uncertainty, while noting continued support from domestic conditions. Growth is expected to be led by tourism, construction and business services, with additional support from 2025 Budget measures including temporary VAT and import-duty removals for inputs used by restaurants and cookshops and concessions on food and beverage inputs for hotels. Other cited growth supports include climate-resilience initiatives in agriculture, investments in technological upgrades and public-sector modernisation, and amendments to the Co-operative Societies Act that allow credit unions to invest in renewable energy, real estate and tourism. Tourism projections assume event-driven demand, increased airlift and seven additional cruise calls, but the central bank flagged risks to tourism spending from uncertainty in key source markets, particularly the United States. External risks were framed around the April 2025 World Economic Outlook downgrade in global growth forecasts (3.3% to 2.8%) and potential spillovers from tariffs and shipping costs, partly offset by Caribbean exemptions from proposed US port fees on Chinese-built vessels and a 90-day pause on most global tariffs; international reserves are still projected to rise modestly despite an expected widening in the current account deficit. Fiscal planning for FY2025/26 targets a primary surplus of 4.4% of GDP following 4.6% in FY2024/25, supported by steps including a concessions platform to strengthen tax administration, state-owned enterprise amalgamations and a new public-private partnership framework, while the financial sector is assessed as remaining resilient with robust capital buffers and elevated liquidity.
Central Bank of Barbados 2025-05-02
Central Bank of Barbados cuts 2025 GDP growth forecast to 2.7% and raises inflation outlook to 1.7–3.5%
The Central Bank of Barbados revised its 2025 macroeconomic outlook, lowering real GDP growth to 2.7% and raising inflation to 1.7–3.5%, citing a weaker external environment and trade-related uncertainty. Growth is expected to be driven by tourism, construction, and business services, supported by budget measures and climate-resilience initiatives. Despite risks from global economic conditions and tourism spending uncertainties, international reserves are projected to rise modestly, with fiscal planning targeting a primary surplus of 4.4% of GDP for FY2025/26.