Driven by continued economic expansions in the oil-rich territory of Guyana, the Caribbean Development Bank (CDB) said it expects regional growth to average 4.6 per cent this year.

Speaking at an annual news conference held on Wednesday, the bank’s director of economics Ian Durant noted that, excluding Guyana, the region’s growth is expected to moderately average 2.5 per cent. While Guyana’s growth is expected to slow to 11.9 per cent this year following rapid oil production in 2024, the country remains a key contributor to region’s performance bolstered by increased tourism activity across various borrowing member countries (BMCs).

“Among other commodity exporters, growth is expected to gain momentum as those countries continue to recover while service exporting economies are projected to expand by 2.2 per cent. Tourism is likely to remain a key driver of economic activity. Construction, supported by public and private investments, is also anticipated to contribute positively to near-term economic performance,” he said.

The director emphasised that most countries are expected to maintain primary fiscal surpluses, which should strengthen debt positions, despite potential downside risks which could alter the bank’s projected growth trajectory.

“Internationally, geopolitical tensions along with the resurgence of protectionist policies could elevate uncertainty in global markets, disrupt supply chains and exert upward pressure on commodity prices. Additionally, policy shifts in the US, including evolving policy priorities, will add to the uncertainty of the outlook. Potential slowdown in major trading partners such as the US could dampen the demand for regional exports. Domestically, the ability to execute critical infrastructure projects on time will also be crucial as delays could hold back growth in industries such as construction, energy, and transportation,” Durant said.

Highlighting the Caribbean’s ever present vulnerability as an area of significant concern, he further said that the increasing frequency and severity of extreme weather events could significantly disrupt economic activity, reverse development gains, and threaten fiscal and debt sustainability. He also cautioned that upcoming elections in most regional countries in 2025 and 2026 could lead to fiscal pressures and policy shifts that may slow reform efforts.

“Higher growth will be necessary to reduce poverty, bridge inequalities and elevate the standard of living for Caribbean citizens,” he added.

In 2024, the region’s output grew by 8.8 per cent, up from 6.6 per cent in 2023, driven heavily by Guyana’s exceptional performance.

Guyana’s economy, which surged by 43.5 per cent, was fuelled by increased oil production and the continued expansion of its non-energy sectors. In contrast, Haiti, delivering zero output, recorded its sixth consecutive year of economic contraction due to persistent political instability, gang violence, and high inflation.

Despite variations in output, Durant, in underscoring the region’s resilience, said he remains hopeful that countries will continue to steadily emerge from some of the most severe shocks witnessed in recent history, such as the COVID-19 pandemic, supply chain disruptions, geopolitical tensions and high inflation.

As countries, however, move to address the challenges going forward, the path to success, he said, will demand bold action, resilience building, and increased opportunities for inclusive and sustainable growth.

Newly appointed CDB President Daniel Best, in outlining a bold vision for the 55-year-old Barbados-based institution, said the current moment presents an opportunity for “rebirth” and a renewed focus on creating impactful solutions for Caribbean people.

The bank, backed by a US$77-million increase in its special development fund (SDF), should be able to do much for BMCs this year. Now in its 11th cycle the SDF, supported by a historic US$460-million in replenished funds from contributors, is to be disbursed through numerous grants and concessional loans to support the growth and development of countries across the region. The funds are to be spent over a three-year period between 2025 and 2028 and will finance climate resilience, poverty alleviation, social and economic infrastructure, and institutional capacity-building across the region.

Following the cutting of aid by the United States Agency for International Development (USAID), Best said much of the funds under the new SDF cycle will provide buffers against the more than US$280 million in undisbursed obligations of which the Caribbean will lose out in US funding, about 80 per cent of which were earmarked for Haiti.

He said the CDB, having conducted its own assessment of all the regional organisations affected, is now actively working with partners to see how best it can fill the gaps as it responds to the most vulnerable and immediate needs.

“Going forward, we will need to further bolster partnerships. We’ve already started to reach out to some non-traditional partners and in a few weeks’ time we should also be travelling to some different spaces as we push to mobilise more resources for the region — not just for the bank, but to fill the gaps. In light of the many lives, livelihoods, and life chances that are to be impacted by the absence of those US resources, as a development entity we are prepared to step up with our traditional partners through the SDF and with new partners to address the gaps,” said Best, who at the end of 2024 was elected as the CDB’s seventh president following the resignation of Dr Hyginus “Gene” Leon.

“CDB’s goal is to see the region thriving, with vibrant, sustainable economies and societies where all Caribbean people can succeed. Our people deserve nothing less than bold, decisive action. CDB stands ready to partner with governments, private sector actors, and development institutions to build a stronger, more resilient Caribbean,” the president said.