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Historically, Barbados’ economy was defined as an agrarian based economy heavily reliant on sugar agriculture. This structure remained in place for the better part of 300 years until around the early 1960s when tourism and hospitality services emerged as part of a concerted effort of economic diversification by government. This was further expanded by the emergence of a relatively vibrant light manufacturing sector.
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Like most of the Caribbean region, Barbados is highly vulnerable to external shocks such as economic recessions, oil price shocks, military conflicts and natural disaster. To this extent, and due to persistent structural imbalances in its economy the country has struggled for the better part of the past two decades to contain it levels of debt incurrence. As a result, the country is characterized by high debt. This high public debt to GDP ratio (put at almost 160%) can arguably be the underlying factor for the country’s first ever sovereign debt restructuring in 2018, to facilitate the economy’s debt infrastructure rehabilitation.
In 2019, the COVID 19 pandemic forced the closure of the country’s economy including a cessation of exports of tourism services and a dramatic decline in foreign direct investment. Revenues are estimated to have declined year on year 2019-2020 by more than 400 million (BDS$), while expenditures grew by more than 200 million dollars over the same period.
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The social and economic costs of the pandemic were significant. As the country continues to recover from the pandemic and roll-back restrictions, the mounting debt continues to threaten efforts towards sustainable development.