Nigel Clarke, Director of the Western Hemisphere Department at the International Monetary Fund, says Washington is “very concerned that tourism-dependent Caribbean economies are likely to be the hardest hit” as a result of the ongoing Middle East conflict that has driven up global oil prices.
“Their debt is high, their fiscal space is small, and they’re quite large net energy importers, despite investments that have been made in these countries in shifting towards renewables,” Clarke said.
“We also don’t know what the potential impact of this war and the shifts in energy prices may have on flights and on tourism. And so, that’s another thing that we’re keeping an eye on,” he added.
Last Friday, the IMF said that Caribbean Community countries will register mixed economic growth over the next two years, ranging from 3.1 per cent among tourism-dependent countries to 19.1 per cent among the region’s commodity exporters.
The IMF projects overall regional growth of 5.7 per cent in 2026 and 8.6 per cent in 2027. Caribbean tourism-dependent countries are expected to record growth of 0.9 per cent and 2.5 per cent over the same period.
Non-tourism-dependent countries are projected to grow by 7.9 per cent in 2026 and 11.3 per cent in 2027, according to IMF forecasts.
Among tourism-dependent economies, Jamaica is expected to register minus 1.2 per cent growth this year, improving to 3.1 per cent in 2027. Grenada is also projected to record 3.1 per cent growth.
Antigua and Barbuda is expected to record growth of 2.6 per cent and 2.4 per cent over the next two years, while The Bahamas is projected to grow by 2.1 per cent this year, declining to 1.9 per cent in 2027. Barbados is expected to grow by 2.5 per cent and 2.2 per cent respectively.
Belize is forecast to register economic growth of 2.2 per cent this year, easing slightly to 2.1 per cent in 2027, while Dominica is projected to grow by 3.1 per cent this year before slipping to 2.8 per cent the following year.
The twin-island Federation of St. Kitts and Nevis is expected to record growth of two per cent this year, rising slightly to 2.5 per cent in 2027. Saint Lucia is projected to grow by two per cent this year before declining to 1.7 per cent next year.
St. Vincent and the Grenadines is also expected to see a decline in economic growth to 2.7 per cent in 2027, down from three per cent this year.
Clarke said several Caribbean countries have already begun implementing measures to cushion the impact of higher oil prices.
“I think several countries in the Caribbean already have mechanisms in place that smooth energy price increases so that not all of that energy price increase is passed through immediately,” he said.
“But what we don’t want is for countries to permanently increase subsidies to energy. Those subsidies are untargeted; they benefit the rich more than they benefit the poor.”
Clarke warned that oil price volatility could make subsidies costly and unpredictable.
“So, the size of the subsidies you may be creating over time could be quite large and quite unpredictable. So, we think trying to let the market mechanism work… will allow individuals and firms to make decisions to reduce their demand for energy.”
On migration trends to the United States, Clarke said the IMF does not foresee a downturn in the region that would trigger increased migration.
“We actually feel this region is quite well placed with decent fundamentals and some fiscal space. So, we don’t see an economic downturn in our forecasts,” he said.
He noted, however, that migration pressures remain for certain countries.
“There are important issues related to migration for particular countries. We can think of Venezuela and Haiti, but I don’t think that sort of a sudden push of migration flowing northwards seems likely at this point,” Clarke added.
