Having stabilised the economy, the authorities must now shift gears to achieve the even harder task of transforming it.
That advice came Thursday from respected economist Professor Justin Robinson as he reflected on the Central Bank of Barbados’ third quarter economic review where Governor Dr The Most Honourable Kevin Greenidge reported that real gross domestic product expanded
by an estimated 1.4 per cent, between January and September, lower than forecasted and below the 2.3 per cent in the corresponding
period of 2025.
The Central Bank also lowered the full 2026 growth forecast from two per cent to 1.7 per cent, a sign of the Barbados economy losing some steam with a “sharp third quarter contraction in agriculture, softer tourism activity and a decline in construction”.
Robinson, speaking in his personal capacity, said that Barbados “has done the hard thing and now it must do the harder thing”.
His view at the outset was that given where the Barbados economy had come from in 2018, the Central Bank’s nine-month economic review gave a first impression of “reassurance”.
“Reserves of $2.8 billion, almost 23 weeks of import cover, close to double the international benchmark. A primary surplus of 3 per cent of GDP. Public debt down to 93.6 per cent of GDP, from more than 125 per cent in 2020/21. Bad loans at the commercial banks down to 3.3 per cent. An International Monetary Fund precautionary arrangement sitting in the drawer as insurance, not rescue,” he noted.
“Anyone who remembers where Barbados stood in 2018 should pause on that. Stability of this kind is not an accident. It was built, at real cost, by people who paid taxes, absorbed a debt restructuring and kept faith.”
Robinson added, however, that a second read of the economic review was another story, which was that the economy “has secured its floor but has not yet found its engine”, highlighted by the fact that economic growth is slowing.
He laid out the task ahead for Barbados, recommending firstly that the main economic driver – tourism – should be measured “by what it earns – not by who arrives – nights, spending, local linkages, local supply”.
“Second, treat the [global] minimum tax receipts as capital, not income. Use them to build what outlasts them, skills, infrastructure, export capacity, rather than spending that will be hard to unwind when the receipts fade,” Robinson advised.
“Third, make execution the policy. The bank lists delays in investment projects among the key risks, the reform agenda is largely written and what is scarce is delivery.
“The Caribbean has spent much of the last fifteen years learning, painfully, how to be stable and Barbados has learned that lesson better than most. The next lesson is harder as stability is the floor, not the ceiling. The test of the next decade is not whether we can hold the line, it is whether we can move it,” he asserted.
On economic growth as reported by Greenidge on Wednesday, Robinson observed that the sectors that earn foreign exchange – tourism, agriculture and manufacturing – “shrank by 0.6 per cent between them”.
“Two domestic sectors, business services and wholesale and retail trade, delivered about 97 per cent of the increase in non-traded output. An economy that grows mostly by selling to itself will, sooner or later, run into the foreign-exchange wall,” he pointed out.
“Tourism tells the subtler story. Arrivals rose, barely: 0.2 per cent but visitors stayed 7.4 nights on average instead of 7.6. Visitor nights fell nearly 3 per cent and tourism value added fell 1.2 per cent. Hotels raised rates almost ten per cent, yet occupancy fell more than four points as new rooms outpaced demand.
“We have been trained to celebrate arrivals but the economy does not live on arrivals, it lives on nights, on spending, on how much of each visitor’s dollar stays on the island. A headcount is not a business model.”
On the windfall from corporate tax paid by global multinationals under the Qualified Domestic Minimum Top-up Tax, which helped corporation tax surge by $164.3 million in the first half of the 2026-2027 fiscal year, Robinson noted that “if you take it out, government revenue actually fell.
“On the external side, the gain came from those tax transfers, not from stronger exports with fuel imports alone, jumping by more than 40 per cent,” he said.
“There is nothing wrong with collecting tax that is lawfully owed, and Barbados responded to the global tax rules well. But the Bank itself warns that the timing and persistence of these receipts are uncertain. A windfall is a gift, it is not a foundation and the question is what we build with it while it lasts.”
Robinson also commented on household pressures, including higher unemployment among women while highlighting “the gap between the macro story and the kitchen-table story where a country can be stable in the aggregate and stretched in the household”.