WASHINGTON, CMC -The World Bank Tuesday predicted that economic growth in the Caribbean is expected to strengthen to 7.1 percent this year, with robust performance continuing in 2025 at 5.7 percent.
In its latest Global Economic Prospects report, released here, the financial institution said that excluding Guyana, growth is forecast at 3.9 percent in 2024 and four percent in 2025, driven by moderate tourism recovery and remittances.
According to the World Bank report, real gross domestic product (GDP) growth for The Bahamas in 2024 will be 2.3 percent, declining to 1.8 percent the following year, while the Barbados economy will register 3.7 percent growth, dropping to 2.8 percent in 2025.
The report said that Dominica’s growth of 4.6 percent this year will decline slightly to 4.2 percent the following year, with Grenada registering growth of 4.3 percent this year, dropping to 3.8 percent in 2025.
The World Bank report predicts that Guyana’s economic growth this year will be 34.3 percent before declining to 16.8 percent the following year.
Haiti is the only Caribbean Community (CARICOM) country to register negative growth this year, pegged at minus 1.8 percent but improving to 1.9 percent the following year.
Jamaica’s economic growth this year is projected at two percent, declining slightly to 1.6 percent in 2025, while St. Lucia’s economic growth has been put at 2.9 and 2.4 percent, respectively, for the next two years.
St. Vincent and the Grenadines’ economic growth for this year is estimated at five percent, declining to 3.9 percent next year, while the Dutch-speaking CARICOM country of Suriname will register growth of three percent annually for the next two years.
In the Global Economic Prospects report, the World Bank noted that in the latter part of 2023, Latin America and the Caribbean (LAC) experienced a slowdown in economic growth due to the lingering effects of monetary tightening.
It said that while early 2024 showed some signs of economic firming, the recovery was uneven across the region.
According to the outlook, LAC growth is projected to decline further to 1.8 percent in 2024 before picking up to 2.7 percent in 2025 as interest rates normalize and inflation decreases. Commodity prices are expected to support LAC exports, although subdued growth in China could limit demand for key commodities.
“The forecast is subject to several risks, predominantly to the downside. These include potentially tighter global financial conditions, elevated local debt levels, and a slowdown in China’s growth, affecting LAC’s exports.
“Climate change-related extreme weather events also present a risk. Conversely, stronger economic activity in the United States could positively impact Central America and the Caribbean.”
The World Bank said while facing economic headwinds in 2024, LAC is expected to see a gradual recovery in 2025, supported by declining inflation and accommodative monetary policy.
“The region’s economic performance will be influenced by domestic and international factors, with commodity prices and global demand playing moderate roles.”
In its report, the World Bank said that the global economy is expected to stabilize for the first time in three years in 2024, but at a weak level by recent historical standards.
The World Bank’s latest Global Economic Prospects report noted that global growth is projected to hold steady at 2.6 percent in 2024 before edging up to an average of 2.7 percent in 2025-26.
That is well below the 3.1 percent average in the decade before COVID-19. The forecast implies that over the course of 2024-26, countries that collectively account for more than 80% of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, global economic growth appears steadying,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President.
“However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events.
“Developing economies must find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them, especially the 75 countries eligible for concessional assistance from the International Development Association, will be unable to do this without international support,” Gill added.
The latest Global Economic Prospects report also features two analytical chapters of topical importance. The first outlines how public investment can accelerate private investment and promote economic growth.
It finds that public investment growth in developing economies has halved since the global financial crisis, dropping to an annual average of five percent in the past decade. Yet public investment can be a powerful policy lever.
For developing economies with ample fiscal space and efficient government spending practices, scaling up public investment by one percent of GDP can increase output by up to 1.6 percent over the medium term.
The second analytical chapter explores why small states with a population of around 1.5 million or less suffer chronic fiscal difficulties. Two-fifths of the 35 developing economies that are small states are at high risk of debt distress or are already in debt. That’s roughly twice the share for other developing economies.
Comprehensive reforms are needed to address the fiscal challenges of small states. Revenues could be drawn from a more stable and secure tax base, and spending efficiency could be improved, especially in health, education, and infrastructure.
Fiscal frameworks could be adopted to manage the frequency of natural disasters and other shocks. According to the report, targeted and coordinated global policies can also help put these countries on a more sustainable fiscal path.
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