The Barbados Economy
"This Island's Small Open Caribbean Economy"

As a visitor to the island you are most likely concerned about whether the Barbados economy is a stable one.  Well not only is it a stable one but it is also a thriving Caribbean economy. 

Barbados has one of the most successful economies in the Caribbean region. It has traditionally relied upon the production of Barbados sugar, rum and molasses. However tourism has now become the main source of income for this island. Offshore banking and financial services have also grown in importance as sources of foreign exchange and have significantly benefited the economy of Barbados. Other industries which currently contribute to the economy in Barbados include light manufacturing and component assembly. 

The 1970s saw a period of economic growth but the late 1980s and early 1990s was a time of recession caused by problems in the Barbados sugar industry and a downturn in tourism. The government of Barbados had to approach the International Monetary Fund for assistance in 1992.  Since that time the situation has improved and the economy has grown steadily. 

There was a brief shrinking of the economy in the wake of 9/11 and the associated global decline in tourism in 2001.  This is due to the fact that Barbados money, the Barbadian dollar, is tied to the US dollar.  However economic growth returned in 2004.
 

Inflation in Barbados is around 5%, the unemployment rate is approximately 10% and this country has a relatively high per-capita income.

Due to the island's size and small number of natural resources, Barbados is heavily dependent on imports for the supply of essential goods. Nearly half the land is agricultural and we grow sugar cane, vegetables and cotton, but everything else must be imported. With this being the case the Barbados economy is a Small Open Economy meaning that we are unable to influence the prices we must pay to do trade with other countries.

The Tourism Industry in Barbados

Tourism is absolutely crucial to the Barbadian economy with the service sector as a whole representing approximately 80% of GDP and around 10% of the working population being employed in the tourism industry. 

There is a wide range of tourist establishments ranging from basic self catering to luxury all inclusive resorts on the island.

Visitors to Barbados generally travel from the USA, Canada and Continental Europe but the Barbados Tourism Board is actively undertaking world wide promotion of the island as a unique Caribbean destination. The island also receives a large number of visitors from Caribbean cruise ships as the deep water port in the capital,Bridgetown, is home to our cruise ship terminal. Much of the entertainment tourist facilities are heavily concentrated on the south coast with the west coast being home to many luxury Barbados vacation resorts and luxury villas.

Visitors fly in to our only airport, Grantley Adams International Airport.  This airport is located 13km to the east of Bridgetown at the southern tip of the island and has direct services to the USA, Canada, South America and Europe.  

This airport  is also a major hub for the Eastern Caribbean. It is equipped to deal with large aircraft such as Boeing 747s, and was once a destination for the now retired Concorde. This airport handles around 2.3 million passengers every year and is undergoing a $100 million upgrade project.

The prospects for the tourism industry in Barbados were significantly improved with the construction of the Port Charles Marina in Speightstown. This marina is home to exclusive lagoonfront and beachfront luxury villas with docks for luxury yachts.  The recent Cricket World Cup of 2007 also attracted many visitors and helped improve the Barbados economy and growth figures of the tourism sector, construction, communications and utilities.

The Sugar Industry in Barbados

Although it no longer makes such a large contribution to the economy, Barbados sugar production is still the most important agricultural activity in Barbados. 

Tobacco and cotton crops were replaced in the 1600s when colonists planted fields of sugar cane and brought in slaves to work on the sugar plantations. 

The industry grew rapidly and exports of sugar increased so large plantations were cultivated to keep up with demand. The owners of the large plantations made vast fortunes as absentee landlords, whilst slaves worked their land to harvest and process the sugar cane. At one time there were over 700 landowning families and 80,000 working slaves.

The sugar industry had its most successful period during the 1650s, but continued as the backbone of the Barbados economy until around the time of the Second World War when the industry went into decline. 

The sugar industry still exists, but only continues to survive due to the favourable quotas granted by the EU which unfortunately are decreasing over time. 

Economic Growth and The Future of The Barbados Economy