In 2018 Barbados strengthened its reform impetus to start addressing its precarious balance of payments and fiscal situations. In response to the worsening fiscal and external liquidity position, the Government of Barbados (GOBD) announced in June the Barbados Economic Recovery and Transformation Plan (BERT), which aims to restore macroeconomic stability and place the economy on a path of strong, sustainable and inclusive growth, while safeguarding the financial and social sectors. Included in BERT was the suspension of payments due on debt owed to external commercial creditors and a comprehensive domestic and external debt restructuring.

Fiscal austerity measures related to BERT and the challenging macroeconomic situation negatively impacted the non-traded sectors. These effects more than offset modest gains in tourism and led to economic contraction of 0.6% in 2018. Inflation fell, but remains above its long-term trend, while public sector layoffs may have contributed to rising unemployment in the fourth quarter (Q4) of the year. The public finance outturn improved due to deeper fiscal austerity measures, and contributed to a decline in public debt. Gross international reserves returned to the international benchmark of three months of import cover.