19.05.2026
Barbados’ economy continued to expand in 2025, supported by tourism, construction, business services and public investment. Growth is expected to remain moderate in 2026–2027 as the post-pandemic rebound fades, but continued tourism expansion, infrastructure projects and reforms under BERT 2026 should support activity. Inflation remains low, helped by easing international commodity and freight costs, although housing and utility costs are adding some pressure. Fiscal performance remains strong, with a large primary surplus supporting debt reduction, while the external position remains vulnerable to import demand, commodity prices and climate shocks.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 2.7 | 2.7 | 3.0 |
| Inflation (%, yoy) | 0.7 | 1.7 | 2.0 |
| Employment rate (% of working-age population, 15+) | 58.2 | 58.2 | 58.2 |
| Fiscal balance (% of GDP) | -0.5 | -0.8 | -0.1 |
| Gross public debt (% of GDP) | 93.3 | 92.0 | 89.9 |
| Current account balance (% of GDP) | -7.5 | -6.3 | -5.8 |
Growth remains moderate after the post-pandemic rebound
Barbados’ real GDP growth is estimated at 2.7% in 2025, following 3.4% in 2024. Growth remained supported by tourism, market services, construction and public investment. The economy has moved beyond the sharp post-pandemic rebound phase, so expansion is now expected to proceed at a more moderate pace.
Growth is projected to remain at 2.7% in 2026 and rise to 3.0% in 2027. Tourism should continue to support services activity, while infrastructure projects and investment under the BERT 2026 programme are expected to strengthen construction and related sectors. However, capacity constraints, labour availability and exposure to external demand may limit faster growth.
Inflation remains low
Inflation declined sharply in 2025, with consumer price inflation estimated at 0.7%. Lower international oil and freight costs helped ease price pressures, while the exchange-rate peg to the US dollar continued to anchor inflation expectations.
Inflation is projected to rise gradually to 1.7% in 2026 and 2.0% in 2027, but remain contained. Housing, utilities and stronger domestic demand may add modest upward pressure. The main risks come from higher energy prices, food prices, transport costs and supply disruptions, particularly if global commodity price shocks persist.
Fiscal discipline supports debt reduction
The fiscal deficit narrowed to an estimated 0.5% of GDP in 2025, while the primary surplus remained strong at around 4.1% of GDP. Fiscal performance has benefited from strong revenues, disciplined expenditure management and continued implementation of the Barbados Economic Recovery and Transformation programme.
Public debt remains high but continues to decline. Gross public debt is estimated at 93.3% of GDP in 2025 and is projected to fall to 92.0% in 2026 and 89.9% in 2027. Maintaining primary surpluses will be essential to keep debt on a downward path, especially given Barbados’ exposure to natural disasters and climate-related spending needs.
External balance remains vulnerable to imports and tourism cycles
The current account deficit widened to an estimated 7.5% of GDP in 2025, reflecting higher imports of vehicles, food and construction inputs, as well as weaker exports in some categories. Tourism receipts and investment inflows continue to provide important support, and international reserves remain adequate.
The deficit is projected to narrow gradually to 6.3% of GDP in 2026 and 5.8% in 2027 as tourism receipts strengthen and import pressures ease. However, the external position remains sensitive to tourism demand, commodity prices, global financial conditions and climate shocks. A weaker US or global economy, higher energy prices or a major hurricane would quickly affect growth, fiscal revenues and the balance of payments.
Overall outlook
Barbados is expected to maintain moderate growth in 2026–2027, supported by tourism, infrastructure investment and continued reforms. Inflation should remain contained, while fiscal discipline is expected to keep public debt on a declining path. The main medium-term challenge is to sustain growth while reducing vulnerability to external shocks, climate risks and high debt. Continued investment in resilience, productivity and higher-value tourism will be important for stronger long-term performance.
Sources:
World Bank, Barbados Macro Poverty Outlook, April 2026.
International Monetary Fund, Barbados: Fifth Reviews Under the Extended Arrangement Under the Extended Fund Facility and the Arrangement Under the Resilience and Sustainability Facility, June 2025.
Central Bank of Barbados, Review of Barbados’ Economy in 2025.
Inter-American Development Bank, Barbados and IDB Group Strategic Agreement: Country Strategy 2025–2030.
OECD, Caribbean Development Dynamics 2026.
