World Bank predicts 4 per cent growth for Barbados in 2024

The World Bank is expecting the Caribbean and Latin America to see a “gradual recovery” this year with projected economic growth of 2.3 per cent and 2.5 per cent next year.

Figures for Barbados were put at 4.6 per cent and 4.0 per cent.

The prediction came as the Bank noted that the medium-term outlook had “darkened” for many developing economies amid slowing growth, “sluggish” trade and tight financial measures.

However, the Bank predicts that in the long term, the Caribbean and Latin America region could continue to be faced with persistent challenges.

The economic outlook for the region also indicated that while the lingering effects of previous monetary tightening will continue to influence near-term growth, their impact is expected to diminish. As inflation slows, central banks are expected to reduce interest rates, alleviating obstacles to investment growth, the Bank noted.

The economic analysis was part of the World Bank’s most recent Global Economic Prospects Report, released on Tuesday in which it suggested that slow growth in the global Gross Domestic Product (GDP) this decade would be the slowest growth in 30 years.

According to the Washington-based institution, in 2023, Latin America and the Caribbean’s report card was marked by a significant economic slowdown, growing just 2.2 per cent amid heightened inflation and tight monetary conditions, weak global trade, and adverse weather events.

The report put Barbados’ GDP growth figure for 2023 at 4.6 per cent, and Dominica’s at 4.9 per cent while St Vincent and the Grenadines had an estimated growth of 6.0 per cent with a prediction for a 4.8 per cent growth this year, compared to Barbados’ expected rate of 4.0 per cent and Dominica’s 4.6 cent. Saint Lucia, which had a 15.9 per cent growth in 2022, is estimated to have a 2023 figure of 3.2 per cent, 2.9 per cent in 2024 and 2.3 per cent in 2025.

The report also stated that despite looming challenges, growth in Brazil and Mexico exceeded previous forecasts. Brazil’s positive performance was fueled by better-than-expected agricultural production, robust private consumption, and increasing exports in the first three quarters of the year while Mexico witnessed stronger-than-projected growth in both private

consumption and investment.

The prospects report said that excluding Guyana, which is experiencing a resource boom, Caribbean economies are expected to grow by 4.1 per cent in 2024 and 3.9 per cent in 2025, partly due to the ongoing expansion of the tourism sector. In Central America, steady growth is envisioned, with rates of 3.7 per cent in 2024 and 3.8 per cent in 2025. This outlook is supported by a moderate increase in remittances, particularly in 2024.

Among the risks forecast for the region are the escalating “geopolitical tensions”, especially in the Middle East which have the potential to disrupt energy markets and cause oil prices to rise.

Extreme weather events, intensified by climate change, present additional risks, particularly to climate-sensitive sectors such as agriculture, energy, and fishing.

“External factors and global trends also contribute to the risk landscape,” the report stated. “Persistent core inflation in advanced economies could be accompanied by persistently high global interest rates, constraining monetary and fiscal policies in the region. Furthermore, a sharper-than-expected slowdown in China’s growth could have notable spillovers to external demand, impacting the region’s commodity exports.”

The institution stated that while the global economy was in a better place than it was a year ago and the risk of a global recession had abated due to the rebound in the United States economy, the dark cloud of the geopolitical environment remained a threat.

“While the lingering effects of previous monetary tightening will continue to influence near-term growth, their impact is expected to diminish. As inflation slows, central banks are expected to reduce interest rates, alleviating obstacles to investment growth,” the Bank reported.

“Global trade growth in 2024 is expected to be only half the average in the decade before the pandemic. Meanwhile, borrowing costs for developing economies—especially those with poor credit ratings—are likely to remain steep with global interest rates stuck at four-decade highs in

inflation-adjusted terms.”

“The potential for economic growth is declining amid a slowdown in total factor productivity and an ageing population,” the Bank indicated.

The report also highlighted the Middle East conflict as a risk to the energy markets and rising oil prices as well as the impact of climate change triggering extreme weather events that would impact agriculture, energy and fishing.

External factors and global trends also contribute to the risk landscape. Persistent core inflation in advanced economies could be accompanied by persistently high global interest rates, constraining monetary and fiscal policies in the region. Furthermore, a sharper-than-expected slowdown in China’s growth could have notable spillovers to external demand, impacting the region’s commodity exports.
(SP)