Barbados’ economy is expected to slow to 2.0 per cent growth in 2026 and 2027, marking the end of its strong post-pandemic rebound and a move towards steadier, slower expansion.
The forecast, from the World Bank’s Latin America And The Caribbean Economic Review (October 2025), says this slowdown reflects high debt levels, weak investment and sluggish productivity across much of the region.
The World Bank notes that Barbados’ economy grew by 4.0 per cent in 2024 and is estimated to expand by 2.7 per cent in 2025, but warns that global financial conditions and local structural challenges will make faster growth difficult.
Government spending remains high while borrowing costs are being pushed up by stubbornly high interest rates in the United States and Europe.
“Limited relief is expected from further interest rate cuts,” the report cautions, adding that this will continue to strain the island’s fiscal space and delay debt relief for households and businesses.
When compared to regional neighbours, Barbados’ forecast is broadly in line with other Caribbean economies but lags behind some. The Bahamas is projected to grow by 2.1 per cent in 2026, Belize by 2.4 per cent and Jamaica by 1.6 per cent, while Trinidad and Tobago is expected to post only 0.3 per cent growth as energy production declines.
The strongest performance in the region continues to come from Guyana, whose oil-driven economy is forecast to expand by more than 22 per cent next year.
The World Bank says this uneven pattern highlights how smaller, tourism-based economies like Barbados face greater exposure to global slowdowns and interest rate movements than commodity exporters.
The bank notes that public debt remains high across the Caribbean, averaging over 70 per cent of gross domestic product (GDP), and this continues to limit the ability of governments to invest in social and infrastructure projects.
Although Barbados has made major strides in stabilising its economy since its International Monetary Fund -supported reform programme, the report says rising debt service costs are reducing the country’s room to
Regionally, progress in creating jobs and reducing poverty has been slow. In Barbados, jobs in the tourism and services sectors have mostly returned, but youth unemployment remains a concern and wages are rising unevenly.
The World Bank also identifies a shortage of what it calls “transformational entrepreneurs”– those capable of growing businesses, adopting new technology and creating better jobs. It says that across the Caribbean, entrepreneurship levels are high but dominated by small-scale, low-productivity ventures.
In contrast, countries such as Costa Rica and Chile, which have invested heavily in science, technology and management training, have seen more firms grow beyond the micro stage.
The report recommends that Caribbean governments improve access to finance, expand STEM education (science, technology, engineering and mathematics), and provide business training to help small enterprises become more competitive.
