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- GDP (PPP):
- $4.8 billion
- 0.5% growth
- 0.6% 5-year compound annual growth
- $17,100 per capita
- Inflation (CPI):
- FDI Inflow:
Barbados’s economic freedom score is 57.0, making its economy the 117th freest in the 2018 Index. Its overall score has increased by 2.5 points, with significant improvements in judicial effectiveness and government integrity outweighing declines in scores for the investment freedom and labor freedom indicators. Barbados is ranked 24th among 32 countries in the Americas region, and its overall score is below the regional and world averages.
Increases in arrivals and spending by tourists have helped economic growth in the past year in Barbados. The government has prioritized fiscal consolidation, but government debt remains a problem. Government economic policies are focused on attracting international companies. Regulatory efficiency facilitates private-sector growth. Transparency levels the playing field for domestic and foreign businesses despite certain restrictions on foreign investment. However, policies intended to buttress open trade and productivity growth are undercut by bureaucracy, discouraging investment expansion.
Independent from the U.K. since 1966, Barbados is a stable parliamentary constitutional monarchy. Prime Minister Freundel Stuart of the center-left Democratic Labour Party, in office since 2010, will face a tough reelection fight in 2018. His tax increases and fiscal austerity program have resulted in some streamlining of the public sector, reform of university tuition financing, and restructuring of state-owned firms. Nevertheless, public-sector debt remains very high. Barbados has transformed itself from a low-income agricultural economy into a more diversified, middle-income economy built on tourism and offshore banking that generates one of the Caribbean’s highest per capita incomes. Tourism receipts have improved, but serious challenges to medium-term economic growth remain.
The protection of property rights is strong, and the rule of law is respected. Property registration in Barbados, however, is very time-consuming. The politically independent court system is based on British common law and is generally unbiased and efficient. The government’s effectiveness in prosecuting official corruption is the best in the region.
The top income tax rate is 35 percent, and the top corporate tax rate is 25 percent. Other taxes include value-added and property taxes. The overall tax burden equals 27.3 percent of total domestic income. Over the past three years, government spending has amounted to 45.0 percent of total output (GDP), and budget deficits have averaged 7.2 percent of GDP. Public debt is equivalent to 107.9 percent of GDP.
The process for starting a business has been made easier, and the overall regulatory environment is relatively straightforward and transparent. Wages in Barbados are among the highest in the Caribbean. Minimum wages are set for only a few categories of workers. Subsidies to inefficient state-owned enterprises consume close to 8 percent of the budget.
Trade is significant for Barbados’s economy; the combined value of exports and imports equals 83 percent of GDP. The average applied tariff rate is 13.9 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. The banking sector provides a wide range of services for domestic and foreign investors, but securities markets are relatively illiquid.