Caribbean Economies Set for Modest Growth, Challenges Loom

• The Caribbean Development Bank (CDB) forecasts regional economic growth of 2.5% in 2025, excluding Guyana, with overall growth reaching 4.6% when Guyana’s oil-driven expansion is included. Despite a steady outlook, the bank’s Director of Economics, Ian Durant, warned that geopolitical tensions, climate risks, and delays in critical infrastructure projects could hamper economic performance.
• Economic expansion in 2025 is expected to be driven by continued strength in tourism and construction. Service-exporting economies are forecast to grow by 2.2%, while commodity exporters are set to gain momentum.
• Regional GDP growth, excluding Guyana, slowed to 1.7% in 2024 from 2.5% in 2023, as post-pandemic recovery momentum eased. Fifteen of CDB’s borrowing member countries (BMCs) surpassed pre-pandemic output levels. Guyana led regional performance with a 43.5% expansion, while Haiti remained in crisis, suffering its sixth economic contraction due partly to political instability and inflationary pressures.
• Service-exporting economies experienced a slowdown, with growth at 1.6% compared with 2.8% in 2023. Tourism arrivals remained strong, exceeding pre-pandemic levels in several BMCs, while construction was another key economic driver, bolstered by infrastructure investments and private-sector developments.
• While inflation moderated and unemployment declined in most countries, Hurricane Beryl’s devastation across multiple BMCs underscored the region’s vulnerability to climate shocks. Fiscal positions strengthened, with most BMCs achieving primary surpluses, though public sector wages and infrastructure spending increased. Although debt levels increased in nominal terms, the regional debt-to-GDP ratio declined to 50.9% from 55.6% in 2023, and five BMCs – Anguilla, Barbados, Belize, Jamaica and Suriname – received sovereign credit rating upgrades.
• That being said, the outlook for 2025 is not without risks, including potential slowdowns in major trading partners, geopolitical uncertainty and climate-related disruptions. Delays in infrastructure execution could also dampen growth.
• The CDB identified three main priorities for action in 2025: strengthening climate resilience, with a focus on disaster preparedness and climate-proofing infrastructure; promoting economic diversification by modernising trade infrastructure and improving the institutional framework that supports and regulates businesses; and enhancing fiscal discipline through effective policies and institutional reforms to ensure sustainable growth and debt stability

(Source: Barbados Today)