Since independence, Barbados has transformed itself from a low-income economy dependent upon sugar production into an upper-middle-income economy based on tourism. Barbados is now one of the most prosperous countries in the western hemisphere outside of the United States and Canada. The economy went into a deep recession in 1990 after 3 years of steady decline brought on by fundamental macroeconomic imbalances. After a painful readjustment process, the economy began to grow again in 1993. Growth rates averaged between 3%-5% since then until 2001, when the economy contracted 2.8% in the wake of the September 11 terrorist attacks and the global drop-off in tourism. Growth picked up again in 2004 and 2005, and the economy grew by 3.8% in 2006.
Tourism drives the economy in Barbados, but offshore banking and financial services have become an increasingly important source of foreign exchange and economic growth. The sugar industry, once dominant, now makes up less than 1% of GDP and employs only around 500 people. The labor force totaled 142,000 persons at the end of 2006. The average rate of unemployment during the last quarter of 2006 was estimated at 7.6%. The current account deficit expanded to 12.5% of GDP, and government debt rose above 80% of GDP in 2006.
Barbados hosted the final matches of the Cricket World Cup in 2007, and much of the country's investment during 2006 and the beginning of 2007 was directed toward accommodating the expected influx of visitors. As a result of these preparations, growth was registered in all sectors, especially transportation, communications, construction, and utilities. The government and private sector are both working to prepare the country for the Caribbean Community (CARICOM) Single Market and Economy (CSME)--a European Union-style single market.
Information by U.S. Department of State