During 2004, growth of the Barbadian economy was strong, particularly in tourism and the nontraded sectors, resulting in single digit unemployment levels for the first time since 2000. However, an accompanying surge in imports further widened the external current account and the net international reserves (NIR) declined significantly. A rebounding economy and decreasing interest rates also fuelled a resurgence in credit demand in the latter half of the year. Consequently, liquidity in the banking system tightened. Nevertheless, under-utilised resources remained relatively high so that the smaller fiscal deficit, emanating mainly from a contraction in Government capital spending, was mostly financed locally.