Economic Review August 2006

Real economic activity in Barbados rose by an estimated 4.4% during the first quarter of 2006, approximately 0.7 percentage points above the rate for the comparable period in 2005. This gain in output was supported by strong growth in the non-traded sectors and the moderate performance of the traded sectors. Despite advances in the non-traded sectors, import growth slowed and, together with an expansion in travel receipts, led to a contraction in the external current account deficit. Moreover, the combination of a lower current account deficit and higher estimated net long-term capital inflows spurred a modest increase in net international reserves (NIR) for the period under review. In line with the slowdown in imports, commercial bank credit to the non-financial private sector grew at a slower rate than during the first three months of 2005. However, with credit continuing to outpace the gains in domestic deposits, liquidity in the banking system tightened further during the review period. The central government recorded a first-quarter fiscal surplus.