Macroeconomic Forecast Barbados

BMI View:Consumer price inflation continued to rise in August 2011, coming in at a three-year record of 10.6% y-o-y. Given that a large portion of the inflationary pressures are imported, and that the island maintains a fixed exchange rate regime, we are concerned that the authorities' ability to bring down inflation will be very limited in the short run. We are therefore revising upward our end-2011 and end-2012 inflation forecasts to 8.0% from 6.0% previously and to 6.0% from 3.9% previously.

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