However, buffers remain adequate 

Durrant Pate/Contributor

Barbados’ external position is expected to weaken moderately in 2026, as the import-dependent economy remains exposed to spillovers from the US/Iran conflict, particularly with higher global oil prices. 

Latest data shows the country’s current account deficit is forecast to widen from an estimated 5.7% of gross domestic product (GDP) in 2025 to 7.5% in 2026, a revision from an earlier projection of 8.4%, after the shortfall narrowed slightly in the first half of 2026. This has come about due to stronger secondary transfer inflows offsetting a wider goods trade deficit. 

The goods trade deficit is projected to widen from 14.2% of GDP in 2025 to 16.9% in 2026, as the oil price shock drives up the import bill. Economic assessment shows pressure, as Brent crude is expected to average US$86 per barrel in 2026, up from US$69 per barrel in 2025. 

Higher international shipping costs and a pipeline of capital investment projects will add to import demand, while goods exports face softer external demand, particularly in the United States, which absorbs around a fifth of Barbados’ goods exports. 

Strong services surplus expected

Partially offsetting the wider goods gap is a strong services surplus, underpinned by tourism, which is expected to hold steady at around 11% of GDP. Tourist arrivals were broadly flat in the first half of 2026, growing 0.1% year-on-year against record 2025 visitor levels, although receipts eased as visitors reduced spending. 

Increased airlift, including additional flights from the United Kingdom over the 2026/27 winter season and a new direct connection with Nigeria, should provide some support. Net transfers almost doubled to around BBD300.0 million (US$150.0 million) in the first half of 2026, driven by first collections under the Qualified Domestic Minimum Top-up Tax. 

Buffers also remain adequate, as international reserves rose from BBD3.0 billion at end-2025 to BBD3.1 billion (US$1.55billion) as at end-June 2026, equivalent to roughly six months of import cover against a recommended minimum of three. 

Of note is the fact that the incumbent Mia Mottey administration secured a US$260.0 million precautionary Stand-By Arrangement with the International Monetary Fund (IMF) in May 2026 that can be drawn on if the conflict escalates further.