Caribbean Market Overview: An Economic Review for Investors

Interested in an economic overview of the Caribbean Market? We provide the latest detailed information for Corporate and Investment clients in our quarterly review.

You can download the latest edition Caribbean Market Overview April 2024 >.

or read the Caribbean Economic Overview & Caribbean Market Review summaries  for a synopsis.

We encourage you to contact a Relationship Manager if you have any queries on Investment Banking in the Caribbean. Our team of experts is ready to assist.

Caribbean Economic Overview

Summary:

The world economy remained unexpectedly buoyant in 2023 despite concerns that aggressive monetary tightening in advanced economies to bridle inflation could trigger a global recession. The IMF estimates that following 3.5% growth in 2022, global real GDP expanded 3.2% in 2023, upheld by a stronger-than-expected performance in the US and several large emerging market economies. Specifically, US real GDP is estimated to have advanced 2.5% in 2023 following 1.9% growth in 2022, supported by robust private consumption partly fuelled by savings accumulated during the pandemic. At the same time, disinflation progressed markedly in 2023 largely reflecting the dissipation of energy price shocks, though the Hamas attack on Israel early October which triggered the Israel-Gaza conflict, and the Red Sea attacks from November, threatened to avert this progress. While the likelihood of a global recession appears to be in the rear view and inflation in major economies is converging toward target levels, the recent escalation of tensions in the Middle East occasioned by Iran’s direct attack on Israel in April 2024 has amplified geopolitical concerns.

Meanwhile, economic recovery in the Caribbean remained steady in 2023 with most markets achieving pre-pandemic levels of output. A strong tourism performance bolstered activity in the accommodation and food services sector, supporting growth of distribution and transportation output, while projects aimed at boosting accommodation room stock in several markets also contributed to robust growth of construction output. Stay-over arrivals to the region1 advanced 19% in 2023 exceeding 2019’s total by 3%, though performance varied widely across markets, with arrivals to Curaçao surpassing by 26% at one end of the spectrum and arrivals to Dominica falling short by 24% at the other. Visitors from the US, representing more than 70% of the total, continued to dominate the expansion, but airlift capacity constraints limited the summer performance from the US and the UK, in particular, in some markets. Intra-regional travel also improved y/y but high air fares and inadequate connectivity continued to limit the outturn. Following a modest recovery in 2022, cruise passenger activity picked up pace in 2023 with arrivals to the region surging 53%, slightly outstripping 2019’s total. Exceptionally, cruise passenger arrivals to The Bahamas advanced to 43% above 2019’s level supported by the redevelopment of the Nassau Cruise Port which facilitated larger vessels and increased passenger volumes, but arrivals to the Cayman Islands fell short by 32%, hindered by the port’s inability to accommodate some of the newer, larger cruise vessels. At the same time, rapidly expanding oil production continued to catapult the Guyanese economy, marshaling growth in the non-oil sector, while economic activity in Trinidad and Tobago likely advanced in 2023, despite an underperformance of energy output.