Caribbean economies face modest growth in 2026 amid global uncertainty – CDB

Mar 04, 2026 News

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…Region expected to grow 1.1%, Guyana to drive that growth to 6.2%

(Kaieteur News) – In 2025, Caribbean economies recorded slower growth amid intensifying global uncertainty, climate shocks, and fiscal pressures. This is according to Caribbean Development Bank (CDB) findings released on Tuesday at the Bank’s Annual News Conference in Barbados.

Presenting a review of the Bank’s 2025 performance and the economic outlook for 2026, Jason Cotton, Acting Deputy Director of Economics, noted that growth across the region decelerated last year as external conditions became less supportive and downside risks materialised.

“Last year was more challenging for the Caribbean region, as global conditions became less supportive and downside risks materialised,” he said. Cotton noted that noted that excluding Guyana, regional growth slowed to 0.6% in 2025, down from 1.4% in 2024. When Guyana is included, overall growth reached 4.7%, reflecting that country’s continued double-digit expansion, albeit at a slower pace than in the previous year.

He explained that outcomes varied across other countries. Among commodity exporters, economic activity in Suriname accelerated, partly reflecting continued oil-related investment, while Trinidad and Tobago (T&T) experienced muted growth.

Cotton stated that service-exporting economies expanded more slowly, as tourism momentum eased. “Once again, climate shocks weighed heavily on performance. Hurricane Melissa struck Jamaica while it was still recovering from Hurricane Beryl, pushing the economy into a second consecutive year of contraction. There was, however, some relief on inflation. In line with global trends, price pressures eased across most economies, with regional inflation falling to an average of 3.4%, from its 2022 peak of 9.7%,” he stated.

Notably, the Bank found that labour-market conditions improved in several countries, with lower unemployment and higher participation, though disparities remain, especially among youth and women.

Further, on the fiscal side, Cotton said that consolidation gains achieved in the post-pandemic period stalled in a number of Borrowing Member Countries. Excluding Guyana, the regional primary surplus narrowed to 1.3% of GDP as expenditure growth outpaced revenue – when Guyana is included, the regional primary surplus narrows to 0.2% of GDP. He credits this to Guyana’s significant capital spending.

“Higher recurrent expenditure, climate-related shocks, temporary tax relief measures, and volatile non-tax inflows all contributed to the weakening,” Cotton said.

He added that while the regional central government debt-to-GDP ratio declined slightly to 46.6%, vulnerabilities remain. Debt levels were recorded above 60% in nine countries.

2026 OUTLOOK

For this year, the Bank projects that growth across the Caribbean will remain modest.  Cotton noted that excluding Guyana, regional GDP is forecasted to grow by 1.1%, while Guyana is expected to expand by over 20%, lifting regional growth to 6.2% when included.

He explained that among other commodity exporters, prospects remain mixed, with growth outcomes closely tied to commodity price trends and production dynamics.

Notably, service-exporting economies are anticipated to record modest growth, largely hinging on tourism and construction. Cotton stated that inflation dynamics this year will be shaped by developments in global commodity markets.

He noted that on the fiscal front, while some countries will continue consolidating and strengthening revenue administration, pressures from post-disaster recovery, rising wage costs, and declining Citizenship-by-Investment revenues persist.

Cotton added that in several cases the aforementioned pressures have led to deviations from medium-term debt reduction paths and will require fiscal adjustment to realign with established debt targets and preserve sustainability.

“That said, risks remain on the downside. Global uncertainty, geopolitical tensions, both globally and within the wider Caribbean Basin, and climate-related shocks continue to cloud the outlook,” he noted.

Cotton stated that fiscal risks also remain, particularly in highly indebted countries with limited buffers. “At the same time, stronger than expected tourism outturns, accelerated investment, progress on the renewable energy transition, and accelerated reforms to the business environment could improve medium term prospects,” he said.

Speaking about development imperatives, Cotton highlighted the Caribbean’s recent history of one external shock after another.  “Each one underscoring how exposed small, open economies remain. This year, beyond the shocks themselves, uncertainty has become more deeply entrenched,” Cotton cautioned.

To this end, he noted that this reality makes regional cooperation not just desirable, but absolutely essential.  He said, “In a more uncertain and fragmented world, vulnerability is magnified when countries act alone, but together, we are more resilient. It is equally important to emphasise that we are not without agency. External conditions matter, but they do not fully determine outcomes.”

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• Caribbean Development Bank, GDP ratio, Growth, Jason Cotton

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