The World Bank is projecting that Haiti’s economy will grow at a faster rate than Jamaica’s by 2025.

The multilateral bank, in its January Global Economic Prospects, is projecting Jamaica’s gross domestic product (GDP), the monetary measure of the market value of goods and services, to slow to 2.0 per cent.

This projection represents a 0. 3 difference when compared to the 2.3 per cent projected for last year. It is forecasting a further dip in this figure in 2025, moving from 2.0 per cent in 2024 to 1.4 per cent in 2025.

For Haiti, which is buckling under inter-gang conflict, the World Bank says growth is expected to recover slowly, reaching 1.3 per cent in 2024 and 2.2 per cent in 2025, following five years of economic contraction.

The Caribbean economy, excluding Guyana, which the bank says remains in a resource-based boom since the discovery of oil in 2015, is expected to accelerate by 4.1 per cent in 2024 and 3.9 per cent in 2025.

However, the World Bank says prospects are uneven across the sub-region. The Dominican Republic is forecast to grow by 5.1 per cent in 2024 and 5.0 per cent in 2025, amid structural reforms to attract foreign direct investment.

Among the potential risks to Caribbean economies is the impact of the ongoing conflict in the Middle East on commodity markets and growth in Latin America and the Caribbean (LAC).

“The conflict in the Middle East has heightened geopolitical risks globally, with potentially serious implications for commodity markets and growth in LAC. In particular, any further escalation of the conflict that leads to substantial energy market disruptions could send oil prices soaring, dampening confidence and reversing recent disinflation trends in the region,” the World Bank said.

It further said: “The inflationary effects of rising oil prices would likely be exacerbated by accompanying increases in prices for other energy commodities and fertilisers. Rising inflation could induce central banks in LAC to hold policy rates at levels higher than previously assumed. Falling real incomes and higher borrowing costs could lead to weaker consumption and investment.”

The World Bank says the US dollar is likely to strengthen with ‘concomitant’ depreciations of Latin American and Caribbean currencies, which may result in renewed upward pressure on inflation in the region.

It said this could prompt monetary authorities in LAC to pause interest rate cuts. However, on the fiscal side, the fiscal balances of most LAC economies are insufficient to ensure debt sustainability.

The Caribbean also faces the threat of extreme weather events related to climate change.

“Should weather-related natural disasters intensify in LAC in the coming years, the production of food and other primary goods could be disrupted,” the World Bank said. “This, in turn, could affect not only growth but also the conduct of monetary policy authorities in the region. The adverse effects of disasters on growth would likely be most serious in the region’s poorer countries, which tend to have less resilient infrastructure.”

The bank is urging countries to do more to tackle the issue of climate change and achieve other development goals through the implementation of a comprehensive policy package to improve fiscal and monetary frameworks, expand cross-border trade and financial flows, improve the investment climate, and strengthen the quality of institutions.