By: Staff Writer
April 10, 2026
The World Bank said in a recent report that the conflict in the Middle East is introducing uncertainty within the Caribbean and Central American region.
The report, Latin America & the Caribbean Economic Update, said that as inflation rose sharply across the Caribbean in 2022, driven by higher global food and fuel prices, although countries with exchange rate pegs were better able to cushion these shocks than those operating under inflation‑targeting regimes.
“Since 2023, the normalization of international prices has contributed to a broad easing of inflationary pressures across the region.”
The report added: “Against this backdrop, recent developments related to the conflict in the Middle East introduce additional uncertainty for Caribbean and Central American economies through several distinct channels. Exposure differs across countries depending on their position in energy and food markets.
“At the same time, for economies whose growth models rely heavily on services—particularly tourism—shifts in global demand, air‑travel costs, and a more cautious short‑term global environment represent an additional source of vulnerability.
“Where these channels intersect, external shocks may compound, underscoring the sensitivity of growth prospects to global developments and reinforcing the importance of resilience‑building policies, diversification, and adequate buffers.”
Latin America and the Caribbean (LAC) is projected to grow 2.1% in 2026, below the 2.4 percent recorded in 2025, the World Bank also said. Growth for 2027 is projected at 2.4 percent. The subdued outlook reflects a challenging macroeconomic environment, with high borrowing costs, weak external demand, and inflationary pressures from geopolitical uncertainty damping private investment and job creation.
The report argues that, with the right policies, the region can pivot and harness its natural resources, energy potential, and reform momentum to create quality jobs and foster more inclusive and productive growth.
“Latin America and the Caribbean have the assets—and the reform capacity—to achieve far more. The central ambition should be clear: create quality jobs that power growth and lift productivity,” said Susana Cordeiro Guerra, World Bank Vice President for Latin America and the Caribbean.
Restoring business confidence, unlocking private investment, and raising productivity are essential.
The region has strategic strengths to build on: approximately 50 percent of global lithium reserves, one third of copper, a relatively clean energy mix, and, in several countries, a reform momentum that is gaining ground.
Harnessing these assets to boost growth and create quality jobs will require building technical and entrepreneurial foundations for sustained competitiveness.