Barbados ‘BBB-/A-3’ Ratings Affirmed; Outlook Remains Stable

Overview Barbados’ economy is slowly recovering from the global financial crisis, and we expect real GDP growth of 2% this year. Fiscal measures passed in December 2010, together with constrained expenditures, are helping to stabilize the fiscal accounts. The general government deficit narrowed to 5.6% of GDP in 2010, and we project it will decline […]

By Business Barbados

May 19, 2011

STANDARDS & POOR'S

Overview

  • Barbados’ economy is slowly recovering from the global financial crisis, and we expect real GDP growth of 2% this year.
  • Fiscal measures passed in December 2010, together with constrained expenditures, are helping to stabilize the fiscal accounts. The general government deficit narrowed to 5.6% of GDP in 2010, and we project it will decline further, to 4.6% of GDP, in 2011.
  • We are affirming our ‘BBB-/A-3’ local- and foreign-currency ratings on Barbados.
  • The outlook remains stable, reflecting our expectation that the economic rebound will continue and that the external accounts will remain stable.

Rating Action

On May 3, 2011, Standard & Poor’s Ratings Services affirmed its ‘BBB-/A-3’ local- and foreign-currency sovereign credit ratings on Barbados. The outlook remains stable. In addition, Standard & Poor’s affirmed its ‘BBB’ transfer and convertibility assessment on Barbados.

Rationale

Barbados is slowly recovering from the severe impact that the global financial crisis had on the country’s narrow and open economy. After contracting in 2008 and 2009, the real economy rebounded slightly, by 0.3%, in 2010. We believe that the economy has bottomed out and that economic activity is now accelerating. Real GDP increased by 2.8% in the first three months of 2011. A pickup in tourism (arrivals and spending grew by 7% each in the first quarter of 2011) as well as a gradual rebound in other private-sector activity should support the forecasted real GDP growth of 2% this year and 3% in 2012-2013…

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