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Since achieving independence in 1966, the island nation of Barbados has transformed itself from a low-income economy dependent upon sugarproduction, into an upper-middle-income economy based on tourism and the offshore sector. Barbados went into a deep recession in the 1990s 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 have averaged between 3%-5% since then. The country's three main economic drivers are: tourism, the international business sector, and foreign direct-investment. These are supported in part by Barbados operating as a service-driven economy and an international business centre.
As of 2008, Barbados has a GDP (PPP) of $5.466 billion, a GDP (official exchange rate) of $3.777 billion, a GDP real growth rate of 1.5%, and a per capita PPP of $19,300. The GDP is composed of the following sectors: agriculture 6%, industry 16%, and services 78% (2000 est.). As of 2001 it had a labor force of 128,500, of which 10% were in agriculture, 15% in industry, and 75% in services (1996 est.). The unemployment rate in 2003 was 10.7%, and the inflation rate in 2007 was 5.5%. The Barbadian government had estimated revenues of $847 million (including grants) in 2000, and expenditures of $886 million. The industrial production growth rate was -3.2%.
Offshore finance and informatics are important foreign exchange earners, and there is also a light manufacturing sector. The government continues its efforts to reduce the unacceptably high unemployment rate which it met in the 1990s, encourage direct foreign investment, and privatise remaining state-owned enterprises.
The main factors responsible for the improvement in economic activity include an expansion in the number of tourist arrivals, an increase in manufacturing, and an increase in sugar production. Recently, offshore banking and financial services also have become an important source of foreign exchange and economic growth.
Economic growth has led to net increases in employment in the tourism sector, as well as in construction and other services sub-sectors of the economy. The public service remains Barbados' largest single employer. Total labour force has increased from 126,000 in 1993 to 140,000 persons in 2000, and unemployment has dropped significantly from over 20% in the early 1990s to 9.3% at the end of 2000.
The Barbados government encourages the development in: financial services, informatics, e-commerce, tourism, educational and health services, and cultural services for the future. In 2000 based on Barbados' level of growth – (at the time) Barbados was supposed to become the world's smallest developed country by 2008. This had then been restated as being achievable by around 2025.