CDB forecasts ‘moderate’ economic growth for borrowing members in 2025

By Kenton X. Chance

BRIDGETOWN, Barbados, Mar 19, CMC — The Barbados-based Caribbean Development Bank (CDB) is forecasting economic growth of 2.5% among its 19 borrowing member countries in 2025. This follows growth of 1.7% in 2024, excluding Guyana, whose economy surged by 43.5% last year.

Presenting the Regional Economic Performance and Prospects at its annual news conference here on Wednesday, the CDB’s Director of Economics, Ian Durant, said that the 2025 projection also does not include the forecast for Guyana.

He said growth is forecast to vary among the 16 countries, with Guyana’s expansion expected to slow to 11.9%, following its rapid growth in oil production in 2024.

“Nevertheless, the country’s performance will remain a key contributor to the region’s economic growth,” Durant said, adding that including all 19 borrowing member countries, the region is forecast to grow by 4.6%.

Among other commodity exporters, growth is expected to gain momentum as they continue to recover while service-exporting economies are projected to expand by 2.2%.

“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,” Durant said.

On the fiscal front, the CDB said most governments are expected to maintain primary surpluses, which should further strengthen debt positions in 2025 and Durant said that while the Caribbean region is on track for continued growth in 2025, several risks that could alter this trajectory.

He mentioned geopolitical tensions internationally adding that this, along with a 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 United States, including evolving foreign policy priorities, add to the uncertainty of the outlook. Potential slowdowns in major trading partners, particularly the United States, could dampen demand for regional exports.”

Domestically, the ability to execute critical infrastructure projects on time will be crucial, Durant told the media, adding that delays could hold back growth in industries like construction, energy, and transportation.

The region’s ever-present vulnerability to natural hazards remains a significant concern, Durant said, noting that as climate change intensifies, the frequency and severity of extreme weather events increases, and the risk of disruptions to economic activity grows.

“These natural hazards could not only disrupt economic activity but in some cases may reverse developmental gains and endanger fiscal and debt sustainability,” he said in the outlook that came nine months after the record-breaking Hurricane Beryl devastated parts of Grenada and St. Vincent and the Grenadine while impacting other Caribbean countries.

The   CDB director of economics said that with elections anticipated in many countries in 2025 and 2026, there is an increased likelihood of fiscal pressures and policy shifts that could slow reform momentum.

The 2025 outlook comes even as the regional has largely emerged from some of the most severe economic shocks in recent history, including COVID-19, supply chain disruptions exacerbated by geopolitical tensions, and the high inflation that followed.

“These global headwinds tested our resilience, but our borrowing member countries have weathered the storm and continued to advance steadily,” Durant said.

He said that the 1.7% expansion of the regional economy, excluding Guyana, shows that 15 CBD borrowing member countries have surpassed pre-pandemic real output levels.

“This performance represents a slowdown from growth of 2.5% recorded in 2023, reflecting the diminishing momentum from the post-pandemic recovery,” Durant said.

Growth rates, however, varied, with Guyana and Haiti as outliers. While Guyana’s 43.5% growth was fuelled by increased oil production and continued expansion in its non-energy sectors,  Haiti remains “in crisis”.

“The country continued to grapple with political instability, escalating gang violence, and high inflation, contributing to its sixth consecutive economic contraction.”

When Guyana’s performance is included, regional growth rises to 8.8% in 2024, up from 6.6% in 2023, highlighting the country’s significant influence on regional economic growth.

“For most other countries, growth was moderate,” Durant said and pointed out that commodity-exporting economies like Suriname and Trinidad and Tobago continued their modest recovery from the COVID-19 pandemic.

At the same time, service-exporting economies, many of which have exceeded their pre-pandemic output levels, grew at a slower pace of 1.6% in 2024, down from 2.8% in 2023 as economies settled into more normal patterns of activity.

“The tourism industry remained the key driver of growth. Stayover arrivals reached 6.8 million in the first three quarters of the year, with more than half of borrowing member countries surpassing pre-pandemic levels, and some even setting new records.”

As regards development imperatives, Durant said that for many CDB borrowing member countries, sustaining higher growth remains a challenge, burdened by persistent structural challenges.

“Yet higher growth is necessary to reduce poverty, bridge inequalities, and elevate the standard of living for all citizens and residents of this region. Higher growth is essential —not merely to endure, but to progress,” he told the media.

“The path forward demands bold action to address these challenges, build resilience, and seize opportunities for inclusive and sustainable growth. To this end, the development imperatives for 2025 and the medium-term are clear.”

Echoing CDB President Daniel Best, who spoke earlier in the news conference, Durant said the region must build resilience to climate change and natural hazards.

“Hurricane Beryl’s devastation was a stark reminder of our region’s fragility. We must redouble efforts to climate-proof infrastructure, improve disaster preparedness, and integrate climate considerations into every facet of development planning,” Durant said, warning that the region must address its over-dependence on tourism for foreign exchange earnings.

“Achieving the necessary diversification requires us to build dynamic, internationally competitive economies,” he said, adding that the region needs to modernise its road and port infrastructure “in a coordinated way that allows us to trade among ourselves, build out potential regional supply chains and connect with international markets.

“However, it is not enough to build out infrastructure. We also need to modernise and digitalise the regulatory and support systems to reduce the cost of navigating these business processes.”

Durant said that 24-hour operations at ports, electronic port community systems, coordinated sanitary and phytosanitary standards, cold storage facilities and access to appropriate types and levels of finance are just some of the needs in building out a healthy ecosystem for competitiveness and diversification.

“Finally, fiscal discipline, risk management and strong institutions remain cornerstones of sustainable growth. Maintaining prudent public fiscal management, while prioritising investments in productive infrastructure and the social well-being of our people is critical. Balancing these needs will require visionary leadership and unwavering commitment,” he said.

The CDB director of Economics told reporters that the road ahead for the region is challenging, “but it is also rich with promise.

“The Caribbean Development Bank stands as a steadfast partner to the region in this journey. We are committed to supporting our borrowing member countries as they pursue these imperatives, providing not only financial resources but also technical expertise and strategic guidance.”

He said that as part of this commitment, the CDB will publish a Caribbean Economic Review and Outlook in April 2025, adding that it will provide deeper insights into the trends, challenges, and opportunities discussed at the media briefing.