3.5% growth expected

From five percent down to 3.5 per cent.

That is how Government’s growth expectations have shifted between its second and third Barbados Economic Recovery and Transformation (BERT) plans – BERT 2022 and BERT 2026.

Under BERT 2022, Government had said that the economy was “expected to show a strong recovery in 2022 of around ten per cent, predicated on a rebound in tourism and a suit of large private and public sector construction projects”.

“Annual growth is expected to average 4.5 per cent for the next two years. Thereafter, it is expected that investments in the green transition, housing, climate adaptation and a more knowledge-based economy will push growth to the five per cent target,” it stated more than three years ago in the programme document.

However, in the BERT 2026 plan which Minister of Economic Affairs and Investment Kay McConney laid in the House of Assembly last Tuesday, the average growth projection between 2025 and 2029 is now 3.5 per cent.

“The macroeconomic outlook for the BERT 2026 period is framed by Barbados’ continued recovery from the shocks of the last decade and its ongoing structural transition,” the BERT 2026 plan said.

Tourism diversification

“Real GDP growth is projected to average 3.5 per cent annually over the period 2025-2029, driven by tourism diversification, public and private investment in infrastructure and housing, digital economy expansion, and targeted productivity reforms.

“This follows a cumulative economic expansion of over 25 percent between 2021 and 2024, and a streak of 17 quarters of real GDP growth as of September 2025.”

Central Bank of Barbados data shows that after contracting during the COVID-19 pandemic by 13.7 per cent in 2020 and 0.2 per cent in 2021, the economy grew by 16.3 per cent in 2022, 4.2 per cent in 2023 and four per cent in 2024, with growth of 2.7 per cent predicted for 2025.

The BERT 2026 plan said that Barbados was entering the current period “with a stable and resilient macroeconomic foundation”.

“This position reflects over five years of consistent fiscal prudence, structural reform, and policy credibility. However, the road ahead remains complex,” it stated.

“Global economic uncertainty, tightening financial conditions, and climate vulnerability all demand continued prudence and adaptability. The macroeconomic framework for BERT 2026 is therefore structured to preserve hard-won gains, reinforce debt sustainability, and enable strategic investments in resilience, productivity, and inclusive growth.

“It provides the fiscal and macroeconomic anchor that underpins the programme’s goals and sequencing of reforms.”

The BERT 2022 plan’s five per cent growth objective was predicated largely on increased investment.

“BERT 2022 targets a public investment to GDP ratio of 4.2 per cent of GDP in fiscal year 2022/23 and five per cent over the medium term, which amounts to an average of $500 million per year, highest on record,” it stated.

Raise investment ratio

“The Government needs the private sector to raise its investment ratio from the current 8.5 per cent of GDP – approximately $975 million to date – to 15 per cent of GDP, an annual average of $1.9 billion, in support of the targeted growth.

“Similarly, foreign direct investment today stands at 4.2 per cent of GDP, approximately $482 million, and is projected to move to nine per cent, approximately $1.14 billion, five per cent of GDP, over the medium term of 2023 to 2027. This ranges from an average of $550 million to $630 million in the relevant period,” it added.

Under BERT 2022, Government had said that there would be “growth enhancing structural reforms in order to generate sustainable, inclusive growth”.

“These growth enhancing reforms include measures to improve the supply of skilled labour and risk capital and to improve the speed, cost, predictability and transparency of Government licensing,” it outlined more than three years ago.”

While credit rating agencies Fitch and Standard & Poor’s (S&P) are projecting that the economy’s growth will average two per cent in the next few years, below Government’s predicted three per cent, Central Bank Governor Dr The Most Honourable Kevin Greenidge said at this third quarter press conference in October that he was confident that with major investments, gross domestic product could expand by five per cent.

Greenidge said credit rating agencies and other organisations like his former employer, the International Monetary Fund, tended to be “very cautious and very, very conservative in projections”.

Mentioning improvements in investment, a lower debt-to-GDP ratio of 100.1 per cent at the end of September, and higher foreign reserves, he asserted that “the underlying economic fundamentals are stronger than they ever were before”. (SC)

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