The Central Bank of Barbados (CBB) says the island’s economic outlook for 2026 and the medium term remains favourable, supported by strong fundamentals, disciplined fiscal management and a clear transformational agenda.
In its review of the Barbados economy covering January to December 2025, the CBB said continued momentum in tourism, construction and business services—backed by sustained public and private investment—continues to underpin growth. Low and stable inflation, together with strong external buffers, were cited as key sources of resilience against external shocks.
However, the bank cautioned that the main challenge ahead is execution.
“Sustained public- and private-sector collaboration, continued productivity gains, and timely implementation of reforms under the BERT 2026 programme will be critical to converting stability into higher growth, stronger resilience, and lasting improvements in living standards,” the CBB said.
According to the review, Barbados recorded stable economic growth and low inflation in 2025, even as global trade tensions intensified. Real gross domestic product (GDP) grew by 2.7 per cent, driven largely by tourism, business and other services, construction and agriculture.
The unemployment rate stood at 6.6 per cent at the end of the third quarter, while jobless claims increased modestly during the year. Lower international oil and freight costs helped ease inflation pressures, with the 12-month moving average inflation rate slowing to 0.7 per cent by November 2025. Point-to-point inflation rose to 1.7 per cent in November, reflecting higher housing and utility costs and stronger demand for dining services.
CBB Governor Dr. Kevin Greenidge told reporters that economic growth is expected to remain solid in the near term and strengthen modestly over the medium term. He said real GDP growth is forecast to remain between 2.5 and 3 per cent in 2026, supported by continued activity in tourism, construction, wholesale and retail trade, and business and other services.
“Over the medium term, growth is expected to trend toward about 3.5 per cent per year, supported by sustained public and private investment, productivity reforms, and economic diversification under the BERT 2026 programme,” Greenidge said.
He pointed to a broad investment pipeline as a key driver of medium-term growth, including ongoing and planned projects in airport and seaport infrastructure, road networks, water distribution, sewage treatment, renewable energy and housing. These investments, he said, should sustain construction activity and ease capacity constraints.
Greenidge added that public-sector upgrades, combined with private investment in tourism, real estate and energy, are expected to boost productive capacity and attract further investment.
Tourism, construction and business services are expected to remain the main drivers of growth. Expanded airlift, improved connectivity and scheduled events should support long-stay arrivals, while high vessel occupancy and an active cruise itinerary pipeline are expected to sustain cruise tourism.
Planned expansion and upgrades at Grantley Adams International Airport are expected to increase capacity, improve passenger flow and support higher tourist arrivals over the medium term, reinforcing Barbados’ role as a regional hub. Spillover effects from tourism and infrastructure investment are also expected to benefit accommodation, dining, transport and cultural services.
Greenidge said labour market conditions are likely to remain tight, supporting household incomes and domestic demand. Employment gains in tourism, construction, utilities and services should underpin private consumption, while skills development and productivity initiatives under BERT 2026 aim to ease constraints and support longer-term growth.
While global growth has softened, Greenidge said conditions remain broadly supportive of Barbados’ outlook. Citing the International Monetary Fund’s January 2026 World Economic Outlook, he noted that global growth is projected at about 3.3 per cent in 2026, easing slightly to 3.2 per cent in 2027. Growth in Latin America and the Caribbean is expected at 2.2 per cent in 2026 and 2.7 per cent in 2027.
He warned that trade policy uncertainty and elevated tariffs continue to pose downside risks, but said gradual global disinflation and resilient consumption in key source markets should continue to support tourism and external demand for Barbados’ services.
Inflation is expected to remain low and stable, though subject to external risks. Easing oil prices and lower freight costs should contain imported inflation, while stronger domestic demand may place some upward pressure on selected services. Overall inflation is forecast to remain between one and 2.5 per cent in the near term.
Greenidge also said Barbados’ external position should remain resilient, supported by strong tourism receipts and capital inflows linked to investment projects. However, he cautioned that regional geopolitical developments—including tensions involving Venezuela and increased U.S. military activity in the southern Caribbean—warrant close monitoring, as any sustained disruption could affect tourism flows, shipping routes and import costs.
On the fiscal front, Greenidge said discipline is expected to remain intact even as public investment increases. The government’s intensified capital programme for the 2025/26 financial year reflects a strategy to support growth through infrastructure investment while remaining on track to meet its primary surplus target of 4.1 per cent of GDP.
“Sustaining this balance between higher capital spending and fiscal discipline remains central to achieving medium-term debt objectives and supporting economic expansion,” he said, adding that reforms under BERT 2026 are expected to further strengthen fiscal sustainability and growth.
 says the island’s economic outlook for 2026 and the medium term remains favourable.){kind=link}