G-20 News

Most Caribbean countries will experience economic growth in 2022

Citizens of most Caribbean countries are expected to see positive changes in their economic activities and well-being in 2022, as the world Bank predicts increases in gross domestic product (GDP) over 2021 figures.

This should bring some relief to members of the Caribbean diaspora who sent a large portion of the estimated $126 billion to families and friends in Latin America and the Caribbean in 2021. The growth according to the World Bank is due when international tourist arrivals are expected to resume. Almost all Caribbean countries depend on tourism for necessary foreign exchange and economic sustenance. According to statista.com, tourism contributed 24.5%, or about $24 billion, to the region’s gross domestic product (GDP) in 2020.

Guyana has the highest GDP growth

Of all the countries mentioned in the Bank’s report, Guyana is expected to experience the greatest growth. Guyana’s economy is expected to grow by 49.7%, after recording an estimated increase of 21.2% in 2021. In 2020, when all Caribbean countries experienced a decline in gross domestic productivity (GDP), the Guyanese economy grew by 43.5%. In 2019, the South American state experienced the fastest growth in the world.

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However, Guyana’s growth catalyst does not fit the mold of the growth engine projected by the World Bank. Tourism represents only 0.58% of the country’s GDP. Instead, the recent discovery of vast deposits of oil has provided hurricane-like winds under the wings of its economic growth.

The only country in the lot that will see a drop in its GDP is Jamaica. The island’s productivity will drop from around 4.3% in 2021 to 3.0% in 2022.

GDP growth in the Caribbean
Source: World Bank

The regional view

Regionally, growth is expected to rebound in Latin America and the Caribbean (LAC) when final figures are released for 2021, the Washington-based financial institution said. Its estimates showed a 6.7% increase for the past year, driven by favorable external conditions and pandemic-related developments.

The Bank said strong demand in key export destinations – the United States and China – high commodity prices and continued high remittances to Central American and Caribbean countries also supported growth in 2021.

Looking ahead, the World Bank said regional growth is expected to slow to 2.6% in 2022 and 2.7% in 2023 as fiscal and monetary policy tightens, improving market conditions labor market continues to be sluggish and external conditions become less favourable. favorable. Recovery to pre-pandemic levels of gross domestic product (GDP) will be uneven across the region and prolonged in some countries.

Growth Risks

But while optimistic in its growth projections, the bank pointed to some associated risks. He said risks to growth in LAC include spikes in COVID-19 cases, funding and debt stress, and disruptions from extreme weather events and natural disasters.

“The sustainability of economic recovery in LAC, as elsewhere, depends on controlling the pandemic. COVID-19 outbreaks, including those triggered by new variants of the virus, remain a downside risk even in countries with high vaccination rates,” he said.

“A sudden deterioration in investor sentiment, particularly in an environment of high inflation and high public debt, could trigger debt service issues and capital outflows. low-income workers, limits monetary policy.

The bank pointed out that in advanced economies, inflation was at the highest rates since 2008. It said that in emerging markets and developing economies, inflation had reached its highest rate since 2011.” Many emerging and developing economies are withdrawing policy support to contain inflationary pressures – long before the recovery is over,” he said.

Debt burden of Caribbean countries

In October last year, the bank warned that debt in low-income countries had reached record levels. This report stated that “the stock of external debt of low- and middle-income countries in the Caribbean and other places combined increased by 5.3% in 2020 to reach US$8.7 trillion”.

Many Caribbean leaders have expressed concerns about the consequences of foreign debt on the survival of their country, especially regarding the effects of the COVID-19 pandemic. In March last year, Jamaican Prime Minister Andrew Holness argued for a further extension of the Group of 20 (G-20) Debt Service Suspension Initiative (DSSI). The Prime Minister said at the time: “In this regard, we support the proposal of the Economic Commission for Latin America and the Caribbean (ECLAC) to meet the liquidity needs of the Caribbean countries, through the creation of a Caribbean Resilience Fund”.

The Prime Minister of Antigua and Barbuda, Gaston Browne, said in reference to Small Island Developing States (SIDS), that “at this time, many SIDS face the danger of collapsing cause of massive economic sclerosis, resulting from the deep economic wounds created by COVID, to include the ensuing debt crisis.

Commenting further on the risks associated with its projections, the World Bank said that “economic disruptions related to extreme weather, in part linked to climate change, and other natural disasters pose a significant risk not only to growth prospects region, but also for the lives and livelihoods of people living in the region. “

Last year, hurricane damage in the Caribbean was not as severe as in previous years. Elsa caused the most damage, killing three people and causing major damage in the Lesser Antilles. Hurricane Grace also caused damage to Haiti while it was still recovering from a major earthquake. Nevertheless, the Caribbean is always on the path of natural disasters, especially hurricanes.