The Barbados economy grew by 1% for the first nine months of the year compared to the same period in 2010. This news was disappointing considering the original projection of 2% growth at the start of the year.
The island’s economic growth is heavily dependent on the tourism sector which showed no noticeable increase in real output despite significant growth of 8.7% in the number of tourist arrivals. This means that although more people are now visiting the island, they are spending less money per person with the worldwide economic situation hampering spending and limiting disposable incomes.
The Barbados international business and financial services sector are reported to have activity that is still below the pre-recession levels. More detailed information on the sector was not given however. The sector is a key foreign exchange earner for Barbados, second only to tourism. Tourism accounted for 46% of the foreign exchange earned with the international business sector accounting for 18%.
Unemployment remains around 11%. The Governor of the Central Bank, Dr. Delisle Worrell warned Barbadians to brace for more job losses until the upcoming tourist season starts in December which is expected to turn the situation around.
The Government’s measures to control the fiscal deficit have paid off with the deficit falling to 5.3% of GDP, down from 9.6% in the previous year.
Barbados Economic Outlook
With U.S. and U.K. growth appearing to have slowed down and possibly stalled, the chance of a strong economic recovery for Barbados is also affected. The Central Bank Governor predicts that the Barbados economy will continue to grow at a rate of 1% for the rest of 2011, with the prospect of it growing a bit faster in 2012. However, the uncertain global recovery has the potential to impact this estimate.