BRIDGETOWN, Barbados, CMC—The World Bank said Wednesday that economic growth in the Caribbean this year will be 1.9 percent, increasing to a “modest recovery” of 2.6 percent in 2025.
The World Bank’s Chief Economist for Latin America and the Caribbean, William Maloney, speaking at a virtual new conference where the Washington-based financial institution presented its economic review titled “Taxing Wealth for Equity and Growth,” said Guyana will continue to lead the economic progress in the region.
When asked by the Caribbean Media Corporation (CMC) what pitfalls the Caribbean region could encounter in the new year, Maloney said they need to diversify “to the better use in the case of countries that are exporting trained labor to the United States and to other areas to make those more sustainable models of development rather than treating them as brain drain.
“It is something I think we need to be thinking about, and I think also to the degree that we can develop renewable energy sources, so we are less dependent on energy that would both help us fight inflation…and make us more independent”. Watch video
The World Bank report examines the region’s economic prospects, focusing on growth and fiscal balance. Maloney discusses the role of wealth taxes in creating fiscal space and promoting equity and growth.
He said Guyana “clearly has a bright future in terms of revenue coming from petroleum, and I think the challenge is going to be to use those revenues correctly in such a way that we don’t drive overvaluation of the currency and drive inflation within the country.” Watch video
He said that means having a “well-run and independent Sovereign Wealth Fund,” adding, “I think that’s going to be a big challenge going forward.
“I know that the World Bank is working with Guyana to ensure that the development of these oil investments is environmentally friendly,” he added.
According to the World Bank, Latin America and the Caribbean (LAC) must capitalize on economic momentum to boost growth and the region’s increase of 1.9 percent, slightly exceeding previous estimates.
The region is forecast to grow by 2.6 percent in 2025. These are the lowest rates among all global regions, highlighting persistent structural bottlenecks.
According to the World Bank figures, Barbados’s growth is likely to be 3.9 percent this year, increasing to 2.8 percent next year and 2.3 percent in 2026.
Belize is expected to register 4.3 percent growth this year, dropping to 1.2 percent next year and 0.5 percent in 2026, while Dominica’s growth will be 4.6 percent this year, declining slightly to 4.2 percent next year and 3.2 percent the following year.
In Grenada, the World Bank estimates growth of 3.2 percent this year, improving to 4.7 percent in 2025 and 4.4 percent the following year.
Guyana’s economic growth for this year is estimated at 43 percent, declining to 12.3 percent next year and increasing to 15.7 percent in 2028. Haiti, which is gripped with a political and security situation, will register minus 4.2 percent growth this year, 0.5 percent the following year, and 1.5 percent in 2026.
Jamaica’s economic growth will be 0.8 percent this year, with the World Bank noting that growth in 2025 will be 2.2 percent and 1.6 percent in 2026.
St. Lucia’s economic growth this year is pegged at 3.4 percent, declining to 2.6 [percent the following year and 2.3 percent in 2026, while St. Vincent and the Grenadines will have growth of five percent this year, declining to3.5 2.9 over the following two years.
Suriname, a Dutch-speaking Caribbean Community (CARICOM) country, will have economic growth of 2.9 percent this year, increasing to 3 percent and 3.1 percent over the next two years.
According to the World Bank, oil-rich Trinidad and Tobago will register growth of 2.2 percent this year, increasing slightly to 2.3 percent the following year before declining to 0.9 percent in 2026.
In its report, the World Bank said that the LAC region must seize the current momentum to accelerate growth. It noted that the United States Federal Reserve’s decision to lower interest rates is expected to provide some relief.
Inflation control is another positive development, thanks to the region’s effective macroeconomic management.
“The region has made strides in managing inflation and stabilizing its macroeconomic environment,” said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.
“This is a crucial moment to leverage these achievements to attract the investments necessary for sustainable development, foster innovation, build human capital, create more and better jobs, and empower the region to break free from this low-growth cycle,” he added.
The report highlights that public and private investments in LAC remain low, and the region must fully capitalize on nearshoring opportunities.
It said foreign direct investment (FDI) levels are below 13 years ago in real terms, with greenfield investment announcements favoring other regions.
Despite competitive wages compared to China and other destinations, high capital costs, weak education systems, poor energy and infrastructure, and social instability reduce LAC’s attractiveness as a nearshoring destination.
“Seizing LAC’s major windows of opportunity, the green transition and the nearshoring movement, requires structural reforms across the board to make the region more productive and competitive,” said Maloney.
“This will require generating more fiscal space, improving government efficacy, and reducing the tax burden on the productive sectors. This is a good time for the region to reconsider how its tax systems can best generate revenue while stimulating growth and advancing equity,” Maloney said.
According to the report, the debt-to-GDP ratio rose to 62.8 percent in 2024, up from 59.1 percent in 2019. High debt levels and servicing costs continue to hinder the region’s ability to create fiscal space for public spending and investment.
It said closing this gap is part of a broader development agenda that includes improvements in administrative capacity, spending, and revenue collection.
The report looks at different options countries can explore in this context and takes a deeper dive into wealth taxes to generate fiscal space, equalize incomes, and stimulate growth. Currently, the LAC has some of the highest statutory corporate taxes globally, averaging 24.7 percent, higher than the OECD average of 23.9 percent and Asia’s 19 percent. However, LAC collects only 2.7 percent of its revenues from wealth taxes, compared to 12.8 percent in North America and 4.3 percent in Western and Central Europe.
The World Bank said that revisiting property taxes also has a vital equity component.
It noted that the root of the property tax paradox in LAC lies not in the tax rates themselves but in outdated and inaccurate property valuations, which are sometimes less than 10 percent of market valuations.
“This leads to undervaluation, lower tax bills for landowners, and possible regressivity. Presumptive taxes, based on proxies like size, location, and property type, are often used to generate revenue, but they can also be inaccurate and inequitable.
“To address these challenges, LAC governments need to enhance their fiscal valuation systems, employing new digital platforms and modernizing cadasters to improve property mapping, data collection, and data sharing,” the World Bank said.
Download video – William Maloney, World Bank´s Chief Economist for Latin America and the Caribbean
Download video – William Maloney on Guyana
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