Despite ongoing external shocks, most Caribbean economies are making headway in economic recovery, according to a recent analysis from the Inter-American Development Bank (IDB), although dangers remain in the short term.
Tourism-oriented economies have recovered more quickly than predicted from the acute pandemic-induced contraction of 2020, according to Global and Regional Economies at a Crossroads. Commodity prices have fallen, while they remain higher than pre-pandemic levels, with long-term negative repercussions on consumers across the area, while improving macroeconomic prospects for commodity exporters.
According to the spring edition of the IMF’s World Economic Outlook, the global economy is characterized by slowing growth and persistently above-average inflation. The IMF’s Western Hemisphere Regional Economic Outlook, titled “slower growth, stubborn inflation.” Earlier this year, the IDB Macro Report urged for “preparing the macroeconomic terrain for renewed growth” as Latin America and the Caribbean face a triple threat of social, fiscal, and growth concerns. In addressing these difficulties, the Caribbean is also at a crossroads.
The following are the report’s principal findings:
Following the economic rebound of 2021 and 2022, prominent analysts anticipate a worldwide economic slowdown in 2023, primarily due to reduced growth in advanced economies. Nonetheless, these advanced economies continue to be the primary drivers of demand for Caribbean tourism exports as well as commodities prices.
Regional economies have recovered quicker than the global economy, but growth rates are expected to converge to pre-pandemic levels unless significant structural changes to improve productivity are implemented, as indicated in previous editions of this periodical. Key macroeconomic threats and prospects for economic growth remain relevant in the short term. External shocks from commodities prices, a probable synchronised slump in advanced countries, and external funding constraints are all risks. Emerging opportunities include near-shoring (particularly for global services), a fresh push for regional integration (particularly in agriculture), and the consolidation of current lead industries, with a focus on environmental sustainability and green energy. Government and private sector reactions to new chances can drive nations onto the high path in the current crossroads, with superior economic growth than pre-pandemic levels.
As indicated in the country parts of this report, country circumstances differ significantly. Some countries’ tourism sectors (The Bahamas and Jamaica) have recovered faster than others (Barbados), and Guyana’s hydrocarbon-fueled remarkable growth dwarfs the economic growth of all Western Hemisphere countries. Key dangers and possibilities differ across countries, and these are discussed in the report’s national sections.
“Government and private sector responses to emerging opportunities can steer economies onto the high path in the current crossroads, with superior economic growth than was experienced prior to the pandemic.” “Continued efforts to mitigate risks through macroeconomic policy strengthening continue to be a key enabler for future investment and innovation,” said David Rosenblatt, the IDB’s Caribbean Department’s Regional Economic Advisor.
The IDB’s Caribbean Economics Quarterly series includes Global and Regional Economies at a Crossroads.
It includes country-specific parts for The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago, in addition to a regional overview section.
