Economic Review - December 2007

The Barbados economy grew by approximately 4.2% during the first nine months of 2007, compared to an increase of 3.7% in the corresponding period of 2006 and almost 2 percentage points above the average growth rate for the corresponding periods since the recession of 2001.In keeping with the trend of the last three years, this year’s outcome was driven by broad-based expansions in nontraded activity, especially in wholesale and retail trade, construction, transport, storage and telecommunications and business and other services. Additionally, moderate increases in the traded sectors led to an improvement in the external current account position, evidenced by the robust outturn in travel credits, which offset reduced earnings from domestic exports. This development, together with a strong performance on the capital and financial account, resulted on the largest increase in the net international reserves (NIR) of the monetary authorities over the ninemonth period since 2000. Consequently, the level of liquidity in the banking system expanded and government was able to finance its deficit domestically.