By: Staff Writer
January 16, 2026
The Inter-American Development Bank’s latest Caribbean Economics Quarterly states that most economies will expand driven by tourism in 2026.
Caribbean economies have demonstrated notable resilience in the face of global economic headwinds, according to a new report from the Inter-American Development Bank Group (IDB Group). Strong performance in tourism and energy has anchored regional growth, although significant downside risks persist.
The report also said: “The region’s vulnerability to external shocks remains high. Weakening labour markets in the United States (the Caribbean’s largest trade and investment partner), cautious investor sentiments, potential inflationary pressures from import price pass-through due to tariff-induced price hikes, and evolving global supply chain patterns present downside risks. For tourism dependent economies, some all-inclusive travel may be more sensitive to changes in employment and household income.”
The Caribbean remains vulnerable to external shocks, the report highlights. Potential weakening of labor markets in North America, cautious investor sentiment, and evolving global supply-chain patterns are among the key risks that could dampen growth prospects.
“The Caribbean has navigated a complex global landscape with commendable stability, but we must remain vigilant,” said Anton Edmunds, IDB general manager for the Caribbean. “This report provides a clear-eyed view of the challenges ahead, while also highlighting significant opportunities for growth. Investments in tourism, reliable energy, and technology-focused foreign investment can build greater resilience and secure a more prosperous future for the region.”
The report also said: “The most recent significant regional shock to the Caribbean was Hurricane Melissa, which made landfall in Jamaica as a Category 5 storm. Total damages have been estimated to be US$ 8.8 billion, creating severe disruption to agriculture, services, and Jamaica’s critical tourism sector. Given Jamaica’s economic weight in the region, this disaster is expected to weigh heavily on aggregate Caribbean growth forecasts.
“Commodity prices are expected to fall slightly over the next two years, led by energy prices. This will help alleviate the current account balance for oil importing countries. And by tempering the oil boom in Guyana, it could reduce macroeconomic volatility.”
The report notes that the downward trend in global commodity prices has eased current account pressures for oil-importing countries, while Guyana’s expanding oil sector continues to drive robust growth, with promising prospects for Suriname’s oil sector in the coming years. Tourism-dependent economies such as The Bahamas and Barbados demonstrated strong performance in the first half of 2025, supported by buoyant travel demand.
Despite the challenges, the report identifies significant opportunities for the Caribbean. Diversification within tourism and services, renewed interest in energy resilience, and technology-focused foreign direct investment, which is expanding globally. The Caribbean’s increasing geographic diversification in trade also offers some insulation from global tensions.