Barbados is better positioned to withstand global economic risks, Central Bank Governor Dr Kevin Greenidge insisted on Tuesday, even as growth slows to around two per cent after the rapid post-pandemic recovery.
He sought to allay concerns about the country’s outlook as he commented on the African Export-Import Bank’s (Afreximbank) latest economic assessment of Barbados.
He noted that Afreximbank and the Central Bank broadly agreed on the country’s economic performance and outlook.
Dr Greenidge told Barbados TODAY: “Afreximbank’s assessment is very much in line with the Central Bank’s view that the Barbadian economy remains resilient, with strong macroeconomic buffers and a solid reform foundation, but that growth has now moved from the very rapid post-pandemic recovery phase to a more normal and sustainable pace.
“Afreximbank is projecting growth of 1.9 per cent for 2026. That is effectively consistent with the Central Bank’s current projection of approximately two per cent. Our assessment at the half-year was that the economy grew by 1.4 per cent during the first six months, with domestic sectors such as business and other services and wholesale and retail trade doing much of the work
“Tourism remained an important pillar, but it was softer than we had initially expected, particularly as shorter stays reduced visitor nights and higher airfares and reduced capacity affected some key markets.”
He continued: “Afreximbank’s fiscal assessment is also broadly consistent with ours. Barbados has maintained strong primary surpluses and public debt continues to decline. One difference is simply the date of the data being used. The 96 per cent debt ratio cited in the brief relates to the end of March data vintage. The bank’s more recent estimate puts gross public sector debt at 93.7 per cent of GDP at the end of June.”
But the governor also attempted to clarify the government’s fiscal plans: “The programme targets a primary surplus of 3.5 per cent of GDP (Gross Domestic Product) for FY2026/27 and FY2027/28 (Fiscal Year), but the current baseline assumes 4.1 per cent thereafter as Barbados continues toward the 60 per cent debt-to-GDP target by FY2035/36.”
The new International Monetary Fund (IMF) Stand-By Arrangement should be seen in that context, Dr Greenidge said.
The IMF-supported BERT 2022 (Barbados Economic Recovery and Transformation programme) concluded successfully, and BERT 2026 is now a fully home-grown transformation programme, he suggested.
The Central Bank governor also noted that the new US$257m Stand-By Arrangement is precautionary, providing additional insurance against external shocks while supporting the next phase of structural reform, rather than financing that Barbados currently needs to draw on.
The risks remain significant, Dr Greenidge warned.
Barbados remains a small, open economy exposed to global geopolitical tensions, trade uncertainty, higher freight and energy costs, international interest rates and weaker demand in key tourism markets, he said.
He also cautioned that climate events and natural disasters remain an ever-present risk.
“Domestically, the challenge is to accelerate investment execution, raise productivity, address skills and demographic constraints, and improve export competitiveness.
“What is important, however, is that Barbados is approaching those risks from a much stronger position than in the past. International reserves remain around $3.1bn, the financial system is well capitalised and liquid, the fiscal accounts remain strong and public debt is on a downward trajectory.”
Looking ahead, the central banker pointed to other main growth drivers beyond tourism.
“We expect the investment pipeline to become increasingly important, including tourism-related developments and investment in roads, water, energy, housing and other infrastructure. Faster execution of those projects, together with stronger construction activity, improved productivity and more competitive exports, will be important to sustaining growth and broadening its base.”
“So I would interpret the Afreximbank projections as showing an economy that is no longer relying on post-COVID rebound growth, but is entering the harder phase of generating sustained growth through investment, productivity and diversification.”
He added: “Growth of around two per cent should not be read as economic weakness or contraction. The real test now is whether we can use the stability and buffers we have rebuilt to lift Barbados’ medium-term growth potential and ensure that the gains are broad-based and durable.”
Last Friday, UWI economist Dr Ankie Scott Joseph noted that Afreximbank’s latest Barbados Country Brief closely matches the Central Bank’s projections, with both institutions expecting modest growth, stable public finances and falling debt, though they differ on tourism performance.
The two reports differ on tourism because Afreximbank’s figures end in March, while the Central Bank’s run to June. In the first quarter of 2026, tourism earnings were 3.7 per cent higher than a year earlier.
From April to June, however, earnings fell below 2025 levels. From January to June, tourism earnings rose $10.9m year-on-year, but the pace slowed sharply.
(EJ)
