ECLAC: Guyana drives Caribbean growth as region faces prolonged low-growth cycle

Dec 18, 2025 News

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(Kaieteur News) – The Economic Commission for Latin America and the Caribbean (ECLAC) has warned that the region remains trapped in a cycle of low economic growth, projecting that the main drivers of recent expansion private consumption and external demand will lose momentum in 2026.

According to ECLAC’s latest estimates, regional GDP is expected to grow by 2.4% in 2025 and 2.3% in 2026, extending a four-year period of weak performance with average annual growth of just 2.3%. Presenting its annual report, Preliminary Overview of the Economies of Latin America and the Caribbean 2025, the United Nations regional commission noted that private consumption, responsible for more than half of recent GDP growth will weaken as employment growth slows and external demand softens.

This deceleration is expected to weigh heavily on most economies across the region. Guyana emerges as a regional outlier While most subregions face deceleration, the Caribbean is projected to outperform significantly, with growth of 5.5% in 2025 and a striking 8.2% in 2026. ECLAC attributes this exceptional performance primarily to the rapid expansion of oil production in Guyana, which continues to reshape the Caribbean’s overall growth trajectory.

Guyana’s expanding offshore petroleum sector has become the single most important growth engine in the subregion, offsetting weaker performances elsewhere and lifting aggregate Caribbean growth well above regional averages. In addition to oil, the Caribbean’s outlook is supported by the normalisation of tourism and stronger activity in construction, but ECLAC makes clear that Guyana’s energy boom is the dominant factor. At the same time, the Commission cautions that the Caribbean including Guyana—remains highly exposed to climate-related risks and natural disasters, which could constrain long-term growth if resilience and diversification are not strengthened.

Mixed outlook across Latin America South America is projected to grow by 2.9% in 2025, driven largely by recoveries in Argentina, Bolivia and Ecuador following contractions in 2024. Growth is expected to slow to 2.4% in 2026 as performance weakens across most economies. Central America is forecast to expand by 2.6% in 2025, reflecting softer demand from the United States. Growth is expected to improve modestly to 3.0% in 2026, though vulnerabilities persist due to reliance on trade, remittances, external financing and exposure to climate shocks. Across the wider region, employment growth is expected to slow from 2.0% in 2024 to 1.5% in 2025 and 1.3% in 2026. Inflation, meanwhile, is projected to rise moderately to a median of 3.0% in 2026, remaining below the peaks seen during the 2021–2022 inflationary shocks and broadly in line with central bank targets. Risks ahead ECLAC warns that the 2026 outlook is subject to significant external and domestic risks.

These include slower global growth, especially among key trading partners, uncertainty surrounding United States monetary and trade policy, and potential volatility in international financial markets affecting foreign direct investment and remittance flows. Domestically, weaker labor markets, high debt-servicing costs and vulnerability to natural disasters could dampen growth. The pace of disinflation and the timing of monetary easing will also be critical for sustaining consumption and investment. Turning growth into long-term development Against this backdrop, ECLAC stresses the urgency of expanding macroeconomic policy space and pursuing more ambitious productive development strategies. In a global environment shaped by geoeconomic fragmentation, climate change and rapid technological change, countries must reduce vulnerabilities while mobilising resources for diversification and resilience. ECLAC Executive Secretary José Manuel Salazar-Xirinachs emphasised that escaping the region’s low-growth trap will require bold productive development policies, paired with macroeconomic frameworks that channel more investment into innovation, diversification and quality job creation. For Guyana, ECLAC’s outlook underscores both opportunity and responsibility: the country’s oil-driven growth is transforming the Caribbean’s economic landscape, but sustaining long-term, inclusive development will depend on how effectively this windfall is managed, diversified and converted into resilience against future shocks.

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• Caribbean growth, ECLAC, Guyana, low economic growth

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