Bridgetown, Barbados – Barbados’ economy is demonstrating “resilient economic growth,” fueled by a thriving tourism sector, improved labor market conditions, healthy foreign exchange reserves, and adherence to ongoing economic reforms, according to Vangie Bhagoo-Ramrattan, head of the economic research unit at First Citizens. However, she cautioned that the island’s heavy reliance on the global economy poses a significant risk.
Speaking at a recent Economic Outlook 2025 webinar co-hosted by First Citizens and the Institute of Chartered Accountants of Barbados, Bhagoo-Ramrattan highlighted the positive trends. She noted the strong tourism activity, positive labor market dynamics, the accumulation of foreign reserves, and the positive impact of the IMF-backed economic program. She also acknowledged that while debt remains high, it is projected to steadily decline to a targeted 60% of GDP by fiscal year 2035/2036.
Despite this positive momentum, Bhagoo-Ramrattan emphasized that overall risks to the economic outlook are high and skewed to the downside due to Barbados’ dependence on the global economy. She identified four key factors likely to shape the economic landscape in 2025: US policies under a potential second Trump administration, political and geopolitical risks, Chinese economic policies, and global interest rates and inflation.
Specifically, she pointed to the potential impact of “increased protectionist trade policies” under a Trump presidency, as well as US fiscal policies related to tax cuts and deficit spending. She also mentioned the potential effects of mass deportations on the US labor market.
While acknowledging the US economy’s projected growth of 2.7% this year, slightly down from 2.8% last year, supported by robust consumption and accommodative policies like tax cuts, Bhagoo-Ramrattan stressed that “one of the major downside risks to the outlook for the US is really any adverse effects of tariffs and a reduction in the labor force due to lower migration flows to the US.”
She warned that any escalation in protectionist trade policies would have far-reaching implications for the global economy, potentially worsening trade tensions, lowering investments, reducing market efficiencies, distorting trade flows, and disrupting supply chains.
Bhagoo-Ramrattan also addressed geopolitical risks, such as the ongoing conflicts in Ukraine and the Middle East, noting that their fallout is “far-reaching and can cause disruptions in global economic activity, both through trade and financial linkages.” She emphasized the interconnectedness of the global economy and how these external factors can significantly impact Barbados’ economic prospects.