CBB ‘cautiously optimistic’ about outlook for Barbados
THE CENTRAL Bank of Barbados ( CBB) on Wednesday said while the local economy exhibited significant resilience over the last two years, the outlook for 2024 and into the medium term appears cautiously optimistic.
In its Review of the Barbados Economic Performance, January to December 2023, the CBB said that despite facing global and local headwinds, the Barbados economy sustained its growth trajectory, driven by the robust performance of the tourism sector.
“Amidst challenges such as elevated foreign interest rates, geopolitical tensions, and local climatic events affecting agricultural output and local prices, the Barbadian economy demonstrated resilience and continued its upward growth path in 2023,” said CBB Governor Dr Kevin Greenidge.
He said, anchored by thriving tourism, the economy registered an estimated growth of 4.4 per cent ,and that “this robust expansion not only bolstered transaction-based tax revenues, but also contributed significantly to reducing the debt-to-gross domestic product (GDP) ratio, narrowing the external current account deficit, and enhancing the profitability of the financial sector”.
“The expectations are that GDP will expand further, by about four per cent in 2024 and into the medium term, predicated on continuous investments by both the public and private sectors,” the CBB said, adding that as Barbados charts it course for 2024, a return to pre-pandemic-level tourist arrivals by the end of the year is anticipated.
“Early forward bookings signal renewed interest from travellers in visiting Barbados, while continuous growth in seating capacity represents the airlines’ growing confidence and willingness to meet the demand for travel to the destination,” said the CBB governor.
He said that the hosting of International Cricket Council (ICC) World Cup matches as well as intensified marketing strategies should also garner significant interest in the destination during the summer months.
“Increased visitor demand for local goods and services should contribute to broader economic growth through the associated activity in wholesale and retail, transportation, construction, and other ancillary sectors.”
The CBB said that the Barbados Economic Recovery and Transformation 2022 (BERT 2022) Plan focuses on amplifying investment to ensure sustainable economic growth over the medium term.
It said that the BERT 2022 Plan aims to achieve a public investment-to-GDP ratio of five per cent and double private-sector investment to 15 per cent of GDP, estimated at BDS$1.9 billion (one Barbados dollar=US$0.50 cents) annually over the medium term – the next four to five years.
The CBB said that foreign direct investment also needs to pick up to over one billion dollars.
“Focusing on key areas such as tourism, infrastructure, and the energy sector, the BERT 2022 Plan not only aims to boost productivity and modernise the economy, but also seeks to reinforce vital interconnections across various sectors. This approach ensures inclusive benefits for all communities and sectors in Barbados.”
Greenidge said it is important to note that the growth outlook remains uncertain and is subject to several risks. He said a projected global economic slowdown and potential geopolitical conflicts are downside risks to the 2024 forecast.
According to the October 2023 International Monetary Fund’s World Economic Outlook, a global economic slowdown is anticipated in 2024, driven by monetary policy tightening in advanced economies and conflicts in the Middle East and Europe, which will impact international travel demand.
“To adapt, Barbados’ tourism industry must focus on offering unique and enriching experiences that go beyond the conventional beach holiday, showcasing the island’s rich culture, natural beauty, and varied attractions,” the central bank governor said.