The Central Bank of Barbados published its 2025 economic outlook, projecting sustained expansion with an annual average real GDP growth rate of about 3 percent in the short to medium term, supported by continued public and private investment and further improvements in productivity and competitiveness. Domestic inflation is expected to slow, with the 12-month moving average projected to range between 1.5 and 2.5 percent in 2025 and 2026, while financial soundness indicators are expected to remain strong. Growth drivers highlighted include investment in tourism, business, utility infrastructure, renewable energy and food security, alongside system modernisation to reduce administrative burdens and training and capacity-building initiatives to support workforce needs. Tourism is expected to remain robust in 2025, with increased forward bookings for the first quarter and cruise activity forecast to exceed 2024 levels, including 34 more cruise calls scheduled for 2025. The outlook notes that global conditions will shape performance, referencing a January 2025 World Economic Outlook projection for global growth stabilising at 3.3 percent by year-end, while flagging risks from slower global growth, elevated inflation, trade disruptions in key markets such as the UK, geopolitical tensions, and climate-related disasters. Inflation risks include higher freight costs linked to supply chain disruptions such as the Red Sea crisis and Panama Canal water shortages, and potential domestic food price pressures from unfavourable weather, partially offset in the dairy sector by recent livestock imports. On public finances, the release points to continued pursuit of fiscal targets through increased revenue and careful spending, with upside potential from improved corporation tax performance and the adoption of global tax rules, supporting infrastructure and climate resilience investment and early debt repayment. The debt-to-GDP ratio is targeted to decline to 60 percent by FY2035/36, while a forecast decline in the US Federal Funds Rate could reduce interest rates on existing and projected external debt; domestically, expanded opportunities for government securities are expected to support yield curve development.
Central Bank of Barbados 2025-01-31
Central Bank of Barbados forecasts 3% average real GDP growth and easing inflation for 2025–26
The Central Bank of Barbados' 2025 economic outlook forecasts a 3% annual average real GDP growth, driven by investments in tourism, infrastructure, and renewable energy. Inflation is expected to slow to 1.5%-2.5% in 2025 and 2026, with financial soundness indicators strong. The outlook highlights risks from global economic conditions, trade disruptions, and climate-related challenges, while public finances aim for fiscal targets and a debt-to-GDP ratio reduction to 60% by FY2035/36.