While Barbados has achieved remarkable macroeconomic stability, a leading economist cautions that these gains have not yet translated into broad-based improvements for workers and households. Professor Troy Lorde, Dean and Acting Director of the University of the West Indies’ Shridath Ramphal Centre, analyzed the 2025 Economic Review, revealing both significant achievements and underlying vulnerabilities.
The review demonstrates substantial progress with real GDP growth of 2.7%, inflation slowing to 0.7% on a 12-month moving average, a primary surplus of 3.3% of GDP, and international reserves holding at approximately $3 billion—equivalent to 27.4 weeks of import cover. These indicators reflect sustained fiscal discipline and favorable external conditions that have supported economic recovery.
However, Professor Lorde emphasized that statistical improvements don’t necessarily equate to shared prosperity. The decline in unemployment to 6.6% partially reflects demographic shifts including increased retirements and higher school enrollment rather than robust job creation alone. This distinction matters for understanding true labor market conditions.
Similarly, while inflation control appears impressive, Lorde noted this achievement stemmed primarily from external factors like lower international oil prices and falling freight costs rather than domestic productivity gains or increased competition. Recent point-to-point inflation rose to 1.7% by November, with essential categories like housing, utilities, insurance, and food experiencing heightened price pressures that disproportionately affect lower-income families.
Tourism continues driving growth but reveals concerning market concentration. Arrivals from the United Kingdom declined nearly 6%, while recovery patterns show increasing reliance on US markets, heightening exposure to American economic conditions and policy decisions.
Debt reduction presents another complex picture. The debt-to-GDP ratio declined to 94.6%, but this improvement reflected GDP rebasing—which mechanically lowers ratios by updating economic measurement—alongside strong nominal growth and maintained fiscal surpluses. Meanwhile, gross financing needs rose sharply as the government undertook early repayments of Eurobonds and IMF obligations, with debt service increasing to 12.9% of GDP.
Professor Lorde clarified that GDP rebasing represents improved measurement rather than sudden economic expansion, warning against misinterpretations that might overstate actual performance. External risks including geopolitical uncertainty, trade policy shifts, and weather-related shocks remain significant threats to stability.
The central challenge, according to Lorde, has evolved from achieving stabilization to converting this stability into higher productivity, rising wages, and greater economic resilience—a more demanding phase that now confronts policymakers, businesses, and households alike.