Caribbean economies are on track for growth of up to 3 per cent between 2016 and 2018 as a result of economic proximity with the United States, robust remittances and solid tourism activities, according to just-released World Bank Global Economic Prospects Report (GEP) for 2016.

The report, which is the first of a series for 2016, concurrently warned that the region and Latin America face the risk of financial volatility and reduced capital flows from higher US interest rates and increased investor risk aversion.

The bank anticipates that the slowdown of emerging markets will also constrain growth in developing countries and pose a threat to ‘hard-won gains’ in raising people out of poverty, while an unlikely faster-than-expected slowdown in large emerging economies could have global repercussions, including financial stress around the US Federal Reserve tightening cycle and heightened geopolitical tensions.

“The region would be also negatively impacted by a protracted slowdown in Brazil and Republica Bolivariana de Venezuela. In addition, the region is threatened by a more severe slump in commodity prices, which can hurt export and government revenues of commodity exporters,” the Bank stated in an adjoining report entitled Global Economic Prospects: Latin American and the Caribbean spillovers amid weak growth.

“Finally, extreme weather could also set back growth: forecasts suggest the El Nino weather pattern will be strongest on record, hurting agriculture and potentially damaging infrastructure.”

According to the report, Jamaica should experience growth of up to 2.1 per cent, up from the 1.3 per cent growth the country saw in 2015. Additionally, 2017 should also bring improved growth of 2.4 per cent and 2.6 per cent in 2018.

“The region is projected to recover modestly from recession in 2016, with activity flat after shrinking by 0.9 per cent in the year just ended, as the region grapples with the protracted decline of commodity prices and domestic challenges weighing on the region’s largest economies,” it said. The report added, however, that there are differences among the sub-regions with stronger growth in developing Central and North America and the Caribbean offsetting weakness in South America.

In an economic update on Jamaica last December, the bank described the country’s economic progress as anaemic and heavily reliant on the service sector, while the manufacturing and agriculture sectors showed slow signs of improvement. It added that Jamaica’s poverty rates remained high, and the country has yet to reclaim grounds lost during the global financial crisis.

“More than 40 per cent of the world’s poor live in the developing countries where growth slowed in 2015,” said World Bank Group President Jim Yong Kim in an adjoining release. “Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”

The bank anticipates that weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9 per cent pace, from 2.4 per cent growth in 2015, as advanced economies gain speed. Simultaneous weakness, it says, in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity, since those countries have been powerful contributors to global growth for the past decade.