The economy grew by 1.7 per cent in the first quarter of 2026, the Central Bank of Barbados said on Wednesday, as a run of uninterrupted expansion passed 20 straight quarters, as tourism, construction and services continued to drive broad-based gains despite global uncertainties.
Reporting on the country’s economic performance for the first quarter of this year, bank governor Dr Kevin Greenidge told a press conference at the Courtney Blackman Grand Salle that the growth was sustained in tourism, business, construction and other services, despite the geopolitical conflict in the Middle East and the critical trading waterway in the Strait of Hormuz.
He said: “The unemployment rate stood at 7.2 per cent at end-December 2025, while jobless claims fell during the first three months of 2026, signaling continued labour market resilience. The 12-month moving average inflation rate edged up modestly to 1.1 per cent at end-February 2026, 0.2 percentage points higher than a year earlier, reflecting higher prices for restaurant services.”
“Point-to-point inflation,” he added, “rose to 1.3 per cent in February 2026 from a decline of 0.3 per cent in February 2025, driven by stronger demand for restaurant dining, recreation and culture, education, transport, and healthcare services.”
He reported that Barbados sustained robust external buffers through the quarter.
The bank chief disclosed that international reserves stood at $3bn at end-March, equivalent to 25.5 weeks of import cover, well above the 12-week global benchmark.
“Higher travel credits and a narrower merchandise trade deficit cushioned the reserve position, while lower foreign direct investment inflows and reduced multilateral disbursements following the conclusion of the IMF-supported BERT 2022 programme, accounted for the modest $33.4 million decline over the quarter.”
Dr Greenidge told the audience, which included students from the Barbados Community College, that the government delivered a strong primary surplus while sustaining record capital investment in fiscal year 2025/26.
According to him, stronger domestic activity and personal income gains supported a $126.3m increase in tax revenues, led by higher value added tax and personal income tax collections.
“At the same time, total expenditure rose by $23m, reflecting elevated spending on capital projects and current transfers to state-owned enterprises. The primary surplus reached $647.3m, equal to four per cent of GDP, while the overall deficit narrowed to $58.3 million, or 0.4 per cent of GDP. Economic expansion and the primary surplus reduced the debt-to-GDP ratio by 2.7 percentage points to 94.6 per cent at end-FY2025/26.”
The financial system conditions remained sound, he said, with improving asset quality, ample liquidity and capital buffers well above regulatory requirements.
He said: “During the first quarter, credit and deposits expanded by 0.8 per cent and 1.4 per cent, respectively, providing additional support for economic activity. Loan quality strengthened further, supported by a decline in non-performing loans, while liquidity remained elevated. Deposit-taking institutions also continued to maintain capital levels well above the regulatory requirement.”
A number of areas came under the microscope for special attention, such as tourism, agriculture, international reserves and debt financing.
Long-stay arrivals strengthened during the first quarter of 2026, with broad-based gains across all major source markets, Dr Greenidge said.
Total arrivals, he announced, rose by 1.2 per cent to 237 194 visitors. Arrivals from the United Kingdom increased by one per cent to 91429 visitors, reflecting improved airlift from Heathrow. Other European markets continued their gradual recovery, with arrivals rising by two per cent to 13 252 visitors, supported by Dutch carrier KLM’s flights, which resumed in late 2025 after a hiatus of more than one year.
The governor highlighted that regional travel also strengthened, with CARICOM arrivals expanding by 3.2 per cent to 21 478 visitors.
North American markets also contributed positively during the quarter. Arrivals from the United States rose by 0.5 per cent to 64 275 visitors, supported by additional seat capacity from key gateways including Washington and Charlotte, despite temporary disruptions to flight schedules during the period. Canadian arrivals increased by 1.3 per cent to 35 825 visitors.
Higher room rates lifted hotel revenues, even as occupancy moderated, while cruise activity strengthened sharply on higher cruise calls and vessel occupancy, the bank boss stated.
It was also good news in the area of food security.
Farming expanded for a sixth consecutive quarter with stronger fishing and livestock production. Overall agricultural production increased by 4.1 per cent, driven by strong gains in fishing and selected livestock output. Fish catches rose sharply by 55.2 per cent on higher landings of flying fish, tuna, dolphin, and jacks.
External position ‘strong’
Barbados’ external position remained “strong” in the first quarter of 2026, supported by higher tourism earnings and an improved current account balance, the central bank reported. The current account deficit narrowed by $ 49.8m to $ 6.3m , reflecting stronger travel credits, a smaller merchandise trade deficit, and an improvement in the income account.
“At the same time, the financial account declined by $257m, as lower net public sector inflows and reduced foreign direct investment moderated capital inflows. Gross international reserves stood at $3.0bn at end-March 2026, equivalent to 25.5 weeks of import cover and well above the 12-week international benchmark. “
Overall, the reserve position continued to provide a strong buffer against external shocks, he said.
Foreign reserves remained “robust” at $3bn at end-March, $33.4m below the end-2025 level.
Lower net foreign direct investment and reduced borrowing from the Inter-American Development Bank and the International Monetary Fund, following the conclusion of the IMF-backed programme, accounted for the decline. Import cover measured 25.5 weeks at end-March 2026, which was “well above the 12 -week international benchmark”, the bank said.
Debt and financing
Dr Greenidge said the government’s net financing requirement increased in FY2025/26, reflecting higher external amortisation linked to liability management operations.
“The net financing requirement rose by $271.7m to $1.9bn, equivalent to 11.9 per cent of GDP. Gross financing needs increased to $2.6bn, or 15.9 percent of GDP, while debt service rose to 15.3 percent of GDP from 14.1 per cent in FY2024/25. The primary surplus of $6 47.3m, or four per cent of GDP, helped to partially offset these financing needs,” he reported.
(EJ)
