Barbados: Barbados Economy Profile 2012
Barbados Economy Profile 2012
Historically, the Barbadian economy was dependent on sugarcane cultivation and related activities. However, in recent years the economy has diversified into light industry and tourism with about three-quarters of GDP and 80% of exports being attributed to services. Increase has rebounded since 2003, bolstered by increases in construction projects and tourism revenues, reflecting its success in the higher-end segment, but the sector faced declining revenues in 2009 with the world economic downturn. The country enjoys of the highest per capita incomes in the region. Offshore finance and data services are significant foreign exchange earners and thrive from having the same time zone as eastern US financial centers and a relatively highly educated workforce.
The government continues its efforts to reduce unemployment, to encourage direct foreign investment, and to privatize remaining national-owned enterprises. The public debt-to-GDP ratio rose to over 100% in 2009, largely because a sharp slowdown in tourism and financial services led to a wide budget deficit.
Since independence, Barbados has transformed itself from a low-income economy dependent upon sugar production into an upper-middle-income economy based on tourism. Barbados is now of the majority prosperous nations in the western hemisphere outside of the United States and Canada. The economy went into a deep recession in 1990 after 3 years of steady decline brought on by fundamental macroeconomic imbalances. After a painful readjustment process, the economy began to grow again in 1993. Increase rates averaged between 3%-5% since then until 2001, when the economy contracted 2.8% in the wake of the September 11 terrorist attacks and the world drop-off in tourism. Increase picked up again in 2004 and 2005, and the economy grew by 3.8% in 2006.
Tourism drives the economy in Barbados, but offshore banking and financial services have become an increasingly significant source of foreign exchange and economic increase. The sugar industry, once dominant, now makes up less than 1% of GDP and employs only around 500 people. The labor force totaled 142,000 persons at the end of 2006. The average rate of unemployment during the last quarter of 2006 was estimated at 7.6%. The current account deficit expanded to 12.5% of GDP, and government debt rose above 80% of GDP in 2006.
Barbados hosted the final matches of the Cricket World Cup in 2007, and much of the country's investment during 2006 and the beginning of 2007 was directed toward accommodating the expected influx of visitors. As a result of these preparations, increase was registered in amount sectors, especially transportation, communications, construction, and utilities. The government and private sector are both working to prepare the country for the Caribbean Community (CARICOM) Single Market and Economy(CSME)--a European Union-style single market.
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