The Caribbean is best known for its incredible beaches and the sense of calm it inspires in tourists. It earned a reputation as one of the best regions to retire in. CNBC ran an article in 2018 titled “Retirement on a Caribbean Island can cost as little as $24,000 a year. While this is true for many of the territories within the region, three Caribbean islands are near the top of the ‘most expensive countries to live in’ list.
Using the Cost of Living Index which takes into account the purchasing of a country’s local currency, the average cost of essential groceries, the average cost of transportation, and the average cost of utilities, the Cayman Islands, the Bahamas, and Barbados finished within the top 5 costliest places to live. It’s important to note that the Cost of Living Index does not take into account rent or mortgage but even accounting for rent/mortgage all 3 countries still place in the top 15.
The index uses the average cost of living in New York City as its baseline. The Cayman Islands are around 3.5% more expensive to live in. The Bahamas are 10% cheaper to live in than New York while Barbados is 11% cheaper. For comparison, on average living in the United States is 27% cheaper than living in New York City.
What makes living in these countries so expensive?
The Bahamas, Barbados, and the Cayman Islands all boast a relatively high standard of living compared to the rest of the Caribbean. Each country provides its citizens access to high-quality health care; the Bahamas National Health Insurance Program established in 2017 provides each resident healthcare with no cost upfront. Senior citizens, children, pregnant women, and civil servants all have access to free health care.
By far the biggest contributor to these countries’ high cost of living is how their economies are structured — unlike most of the Caribbean none of these countries’ economies are agricultural based. Whereas Jamaica is a massive producer of sugar and Grenada is the “Spice Island,” these three countries are forced to import most of their goods in addition to importing oil and other essentials.
The Bahamas, Barbados, and the Cayman Islands all rely heavily on tourism and foreign direct investments, with the latter two offering tax breaks and incentives to entice companies and wealthy individuals to their shores.
Despite the high cost of living the purchasing power of each of their local currencies is strong. In Barbados a dollar trades for USD 50c, the Cayman dollar is stronger than the US dollar and the Bahamian dollar trades 1:1 with the US dollar. Compared to Jamaica where 1 US dollar amounts to approximately 154 Jamaican dollars.
