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Tourism-dependent economies to experience subdued growth declares Dr. Nigel Clarke

Durrant Pate/Contributor

The International Monetary Fund (IMF) has projected a mixed economic outlook for CARICOM economies over the next two years with growth expected to vary significantly between tourism-dependent states and commodity exporters. 

This uneven performance is unfolding against a backdrop of rising global uncertainty with the ongoing conflict in the Middle East expected to have clear negative effects on economic activity and living conditions across the region. Tourism-dependent economies are likely to be the most exposed, given their reliance on imported energy and relatively high debt levels.

The outlook for the Caribbean region reflects both opportunity and risk. While stronger performance in commodity-exporting economies provides a source of support, tourism-dependent states remain vulnerable to external shocks. As global uncertainty persists, the effectiveness of policy responses and the strength of underlying economic frameworks will play a central role in shaping outcomes across the region. 

Speaking on the regional outlook, IMF Deputy Managing Director, Dr Nigel Clarke, argued the projected divergent performance reflects structural differences across the region as growth should range from modest expansion in tourism-based economies to strong gains in resource-driven markets. With net energy imports averaging a notable share of output, higher global oil prices are expected to translate quickly into increased costs and weaker growth momentum.

Solid expansion over the medium term 

These pressures are reflected in the region’s growth projections. While the Caribbean as a whole is expected to record solid expansion over the medium term, Dr; Clarke contends that this headline masks significant variation across countries. Tourism-dependent economies are forecast to experience relatively subdued growth, with some facing near-term contraction before a gradual recovery. 

Jamaica, for example, is projected to contract in the short term before returning to growth, while other economies such as Grenada are expected to follow a similar path. In contrast, countries such as Antigua and Barbuda, Barbados, and Belize are expected to maintain modest but steady growth, supported by tourism activity and domestic demand.

By comparison, commodity-exporting economies are expected to outperform, driven largely by higher energy and resource prices. In  the meantime, Guyana continues to stand out as the region’s fastest-growing economy, supported by expanding oil production, while countries such as Suriname and Trinidad and Tobago are also expected to benefit from improved external conditions. 

Haiti, although projected to remain in contraction in the near term, is expected to show some improvement over the forecast horizon. The broader macroeconomic environment remains challenging. Although the Western Hemisphere entered 2026 on a relatively stable footing with growth near potential and inflation close to target in several economies, the global landscape has shifted. 

Rising energy and inflation

Rising energy prices, increased volatility in capital flows, and changing investor sentiment are creating new headwinds. While energy exporters may benefit from improved trade balances and fiscal revenues, higher fuel and food costs are expected to place additional strain on households across all economies.

Inflation pressures are therefore expected to be widespread, affecting key areas such as transportation, food, and other essential goods. This is likely to increase the burden on lower-income households, particularly in economies with limited policy buffers. Dr. Clarke emphasised that countries with strong macroeconomic frameworks, including credible fiscal policies and well-anchored inflation expectations, are better positioned to manage these shocks.

In this environment, policymakers face difficult trade-offs. Central banks are expected to prioritise price stability, even as growth slows, while governments are encouraged to use limited fiscal space carefully. Targeted support for vulnerable groups will be critical, particularly given high debt levels that constrain broader spending measures.