IDB Report Highlights Growth in Caribbean Countries

With the economic and social stresses of the pandemic receding, Caribbean economies are experiencing continued growth into 2024, according to a new report by the Inter-American Development Bank (IDB).

After the strong economic recovery of 2021–2023, Caribbean economies continue to grow at a somewhat faster pace than the Latin America and the Caribbean region, though country circumstances vary. For example, economic growth in Guyana is expected to be over 30% this year, while tourism-oriented economies are expected to grow only 2.6%.

At the same time, economies are experiencing diverging economic growth rates (with the US growing faster than others) leading to different approaches to economic policies. For example, the Eurozone may lower interest rates sooner and more decidedly than the United States. This situation could create both risks and opportunities moving forward.

“Risks and Opportunities for Caribbean Economies in a Diverging World” is part of the Caribbean Economics Quarterly report series which focuses on the economic performance of The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago. This edition analyzes how global economic conditions may impact Caribbean economies. It identifies near-term opportunities and risks.

Other key findings from this edition include:

1. The evolution of global interest rate changes will eventually impact external financing costs for Caribbean countries. In addition, if US interest rates remain high (5.3% federal funds rate as of May 2024) while other major central banks cut interest rates, then the US dollar will likely strengthen relative to other major currencies. This could imply real exchange rate appreciation for Caribbean economies with fixed exchange rates tied to the dollar.
2. Public debt to GDP, on average, has returned to (already relatively high) pre-pandemic levels, averaging 74% in 2023 for the countries analyzed. Further work on strengthening macro frameworks is a fundamental precondition for growth.  
3. A renewed focus on regulatory reforms, human capital and resilient infrastructure could make Caribbean economies “ready for take-off” to higher levels of growth, rather than returning to potential GDP growth pre-pandemic that was less than 1%in tourism-oriented economies.

According to Anton Edmunds, General Manager for IDB’s Caribbean Country Department “Caribbean economies have recovered well from the pandemic and the recent global economic headwinds. Now is the time to focus on the structural reforms at both the national and regional levels to promote more robust and sustainable growth.” 

About Caribbean Economics Quarterly
Caribbean Economics Quarterly is a publication dedicated to advancing economic understanding of Caribbean realities through the lens of The Bahamas, Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago. With a commitment to fostering development, this IDB report continues to be a trusted resource for policymakers, academia, and businesses. Previous editions are available here.