CDB forecasts nearly nine per cent economic growth for Caribbean in 2024

BRIDGETOWN, Barbados:

THE BARBADOS-based Caribbean Development Bank (CDB) yesterday predicted that the average growth rate for the region will be 8.6 per cent this year.

However, Ian Durant, the bank’s director of economics, in a review of the region’s economic performance last year and an outline of projections for 2024, said that the growth would be largely attributable to increased oil production in Guyana and the continued expansion of the tourism industry.

“Excluding Guyana, this growth projection falls to 2.3 per cent, a moderation from the estimated growth of 2.5 per cent in 2023, which aligns with the broader trends of slowing, below-average global growth and the ongoing normalisation of economic conditions in the Caribbean,” Durant added.

Speaking at the CDB’s annual news conference, Durant said recently, the bank’s borrowing member countries (BMC) faced several disruptions to social and economic progress, including the COVID-19 pandemic and consequent deterioration in macroeconomic conditions. He said related global trade and supply chain challenges, compounded by Russia’s invasion of Ukraine in 2022, resulted in significant international commodity price increases.

He said to bring inflation under control, contractionary monetary policy actions were sustained into 2023, raising interest rates and contributing to a slowdown in global economic activity. But he told reporters that the Israeli-Palestinian conflict, starting towards the end of 2023, added to the uncertainty.

“Despite having to navigate this challenging external environment, Caribbean economies continued to rebound from the COVID-19 shock, with an average growth rate of 6.7 per cent in 2023.

“This, however, is a slowdown from the 11 per cent recorded in 2022, reflecting some return to the historical average following the unprecedented shock caused by the pandemic. By the end of 2023, 11 of our borrowing member countries had overtaken pre-pandemic output levels,” Durant told the news conference.

Durant said that higher oil production in Guyana was a significant driver of average regional growth in 2023.

Production increased by 35.2 per cent, influencing growth in the non-energy sectors and contributing to overall expansion of Guyana’s economy of 32.9 per cent. Economic activity in the other commodity exporters – Suriname and Trinidad and Tobago – also expanded but at a more measured rate, with the energy sector in Trinidad and Tobago recording a slight contraction.

He said that as a primarily tourism-dependent region, the ongoing recovery of that industry was also a key driver of the regional economic performance, with service-exporting BMCs growing at an average of 2.4 per cent.

“These economies benefited from robust demand from major source markets, particularly the United States. Mobility and travel essentially returned to normal with the ending of emergency health restrictions in May 2023. ”

Durant said that data for the January to September period showed total arrivals reached 99 per cent of pre-COVID levels, bolstered by continued recovery of airlift and the return of festivals and sporting events across the region.

The CDB official said the tourism outturn, combined with ongoing private and public construction activity, drove real growth for most BMCs.

“Unfortunately, Haiti continued to be an exception to the regional performance, as the country grappled with persistent instability and high inflation, which contributed to weak economic performance.”

Durant said that consistent with generally better economic environments, labour market conditions continued to improve across BMCs. He said despite positive labour market trends, gender gaps persist, with unemployment among women generally being higher than among men. Furthermore, while there has been some moderation in youth unemployment, it remains elevated, compared with other segments of the population, Durant noted.

Last year, inflation, and associated risks to food and energy security, continued to be a major concern. While inflation rates generally eased across the region, mirroring international trends, lingering high energy and food costs, supply chain issues, and strong consumer demand kept inflation elevated. Currency depreciation was also a contributory factor in one BMC.