Caribbean countries anticipate modest expansion in 2026 despite global challenges, says CDB

The Caribbean region experienced a slowdown in economic growth during 2025, amid increasing global uncertainties, climate-related disruptions, and fiscal challenges.

As per a CDB media release, this assessment was shared by the Caribbean Development Bank (CDB) during its Annual News Conference on Tuesday, highlighting the key findings and economic prospects for 2026.

Jason Cotton, Acting Deputy Director of Economics at the CDB, explained that last year’s growth momentum diminished as external conditions grew more adverse and risks materialized. He noted that regional growth, excluding Guyana, declined to just 0.6%, compared to 1.4% in 2024. When Guyana is factored in, the overall growth rate rises to 4.7%, reflecting the country’s ongoing double-digit expansion, although at a somewhat slower rate than before.

“Small, open economies remain highly exposed to external shocks,” Cotton said. “What is more concerning in this moment is the persistence of uncertainty and the narrowing room for policy error.”

Diverse Economic Outcomes and Climate Impact

Economic performances across the Caribbean varied significantly. Suriname, a major commodity exporter, saw an uptick in growth driven partly by sustained oil sector investments. Conversely, Trinidad and Tobago experienced only modest growth.

In economies reliant on services, growth slowed as tourism activity lost some of its previous momentum. In Jamaica, Hurricane Melissa compounded the damage caused earlier by Hurricane Beryl, leading to a second consecutive year of economic contraction.

Inflation rates decreased in line with global trends, dropping to an average of 3.4%, down sharply from the 9.7% peak in 2022. Labor markets improved in several countries, with unemployment declining and workforce participation rising, although disparities remain, especially among youth and women.

Fiscal Challenges Resurface

The CDB also said that fiscal consolidation efforts faced setbacks in many of the Bank’s 19 Borrowing Member Countries. Excluding Guyana, the primary fiscal surplus across the region narrowed to 1.3% of GDP, as spending outpaced revenue collection. Including Guyana, which has significant capital investments, the primary surplus shrank further to 0.2% of GDP.

While the overall central government debt-to-GDP ratio decreased slightly to 46.6%, vulnerabilities persist, with nine countries holding debt levels above 60%. In some instances, fiscal responsibility frameworks provided mechanisms for controlled adjustments, especially in response to climate-related shocks.

Outlook for 2026: Slow Growth Amid Elevated Risks

According to the release, looking ahead to 2026, the CDB forecasts modest growth for the Caribbean. Excluding Guyana, regional GDP is expected to grow by around 1.1%. When Guyana is included—where growth is projected to surpass 20%—the region’s overall growth could reach approximately 6.2%.

For other commodity-exporting nations, prospects remain tightly linked to commodity prices and production trends. Service-driven economies are expected to register moderate growth, primarily supported by tourism and construction. Inflation trends will continue to be influenced by global commodity markets.

However, the outlook remains uncertain due to ongoing global tensions, climate shocks, and fiscal vulnerabilities, especially in countries with high debt levels.

Strategic Development Priorities for Building Resilience

In light of these challenges, the CDB outlined several key development strategies for the Caribbean:

– Enhancing the capacity to implement projects effectively, ensuring that development initiatives and financing translate into tangible results;
– Promoting economic diversification to lessen dependence on single industries and to foster growth led by the private sector;
– Building resilience proactively by investing in climate-resilient infrastructure, improving disaster risk financing, and developing adaptive social protection systems;
– Strengthening fiscal frameworks and institutions to maintain debt sustainability;
– Investing in human capital by providing skills development and expanding decent employment opportunities to boost productivity and promote inclusive growth.

“Resilience is built through credible policy choices, stronger institutions, disciplined execution, and investment in our people, and regional solidarity,” Cotton said. “If we rise to meet this moment, we will shape a more stable, inclusive, and sustainable Caribbean future.”