Caribbean and Latin American Economies Project Modest Growth
The World Bank forecasts moderate economic growth for the Caribbean and Latin America over the next two years, amid diverse challenges.
Morgan Riley
- 2024-01-12
- Updated 08:58 AM ET
(NewsNibs) - The World Bank's latest Global Economic Prospects Report projects a growth rate of 2.3% for Caribbean and Latin American economies in 2023, with a slight increase to 2.5% in 2024. Despite the forecast for growth, developing economies in the region could face a gloomy medium-term outlook with factors such as slowing growth, subdued trade, and tight financial conditions. In such an environment, central banks are likely to lower interest rates as inflation pressures ease, which may encourage investment growth.
Regional Highlights and Challenges
Caribbean nations exhibit varied economic results, with Barbados set to grow by 4.6% in 2023 and 4.0% in 2024. Dominica and St Vincent and the Grenadines are also making notable strides, with projections of growth at 4.9% and 6.0% respectively for 2023. However, potential risks stem from global uncertainties, including geopolitical tensions, particularly in the Middle East, which could disrupt energy markets and impact oil prices. Climate change also poses a severe risk by potentially increasing the intensity of weather events, which would detrimentally affect agriculture, energy, and fishing industries across the region.
Global Outlook and Local Implications
While the global economy exhibits signs of improvement, enduring challenges such as high borrowing costs for developing economies are expected to persist given elevated global interest rates. Central American nations are forecasted to grow by 3.7% in 2024, bolstered by remittances, while Caribbean economies, excluding Guyana, could see growth rates of 4.1% in 2024. Nonetheless, the entire region faces long-term challenges from a potential slowdown in China's economy impacting commodity exports, persistent inflation in advanced economies, and demographic shifts such as an ageing population that may hinder economic potential.
Looking ahead, the World Bank emphasizes a cautious approach for the Caribbean and Latin America, highlighting persistent long-term challenges. As central banks adjust monetary policies in response to changing inflation trends, countries will need to navigate a landscape marked by potential geopolitical instability, climate-related threats, and evolving global market dynamics. The forecasted growth, although modest, comes as a sign of resilience in the face of these mounting global pressures.
