Caribbean & Central America - May 2026

The effects of the war in Iran are cascading unevenly through the Caribbean, with a strongly negative bottom line.

Speaking in April, Nigel Chalk, the director of the International Monetary Fund (IMF)’s Western Hemisphere Department, said tourism-dependent Caribbean countries are likely to be the hardest hit by the wave of global energy shortages and price spikes triggered by the US and Israeli war on Iran. He said, “The conflict carries unambiguously negative economic impacts for both economic activity and the population.” An IMF blog post by Chalk published on 17 April notes that for the tourism-dependent Caribbean economies, “their debt is high and their net energy imports are large”, averaging around 6% of GDP. Overall, the IMF says regional Caribbean GDP growth will be 5.7% this year and 8.6% next year. Admittedly, in the face of the crisis both sound very impressive.

The problem is that these high averages conceal deep and possibly damaging variations between country performances. Tourism-driven economies, including Barbados, The Bahamas, Antigua and Barbuda, and Grenada will grow on average by only 0.9% this year and by 2.5% in 2027. In contrast commodity exporters including Trinidad and Tobago, Suriname, and oil-boom Guyana will grow on average by 10.1% in 2026 and 13.5% in 2027. The IMF says the growth gap between commodity exporters and tourism-reliant states “could deepen through 2027, straining Caricom (Caribbean Community) cohesion on regional economic policy”.

In a report published on 17 April international credit ratings agency Fitch Ratings said that the war in Iran has had limited direct credit effects on the Caribbean but could have a greater effect in more severe scenarios. If for example oil prices average for the rest of this year at over US$100 per barrel (above the US$70 ‘baseline scenario’ used by the agency), and if the hoped-for recovery in remittances sent home by expatriate workers does not materialise, then pressure for sovereign credit downgrades may rise.

Food price inflation is an important part of the combination of risks facing the Caribbean. Speaking on 10 April at a hybrid event held by the United Nations’ Food and Agriculture Organization (FAO), Caricom’s assistant secretary general, Wendell Samuel, warned that the region’s “high import-dependence for food, fertilisers, and shipping services means that the external geopolitical tensions quickly morph into domestic economic challenges…inflation, food affordability, fiscal stability are not abstract risks for us. They are immediate public policy concerns.”

In fact, data for 2022, the most recent available, shows Caricom imports more than 60% of the food it consumes – as outlined by Caricom’s secretary general, Carla Barnett, in 2022, at the launch of the Caribbean Investment Forum. Barnett also noted that in 2018-2020 the import bill was US$13.76bn or roughly 5% of GDP. This is likely to rise as scarcities emerge pushing global inflation upwards.

Samuel described rising food insecurity as “the gravest risk”, noting that small changes in real income can “translate into large movements in poverty rates and consequently, food insecurity”. He called for more improved resilience through productivity-enhancing technologies, climate-smart agriculture, and strengthened regional food systems. Governments should respond to fertiliser scarcity by diversifying supplies and using alternative or organic farming inputs, Samuel stated.

Cruise lines feel the pressure

In early May Norwegian Cruise Line (NCL) cut its profit forecast for 2026 to U$1.45-US$1.79 per share, down from US$2.38 previously, citing surging fuel costs linked to the war in the Middle East and tepid demand for sea voyages. Rivals Carnival (CCL) and Royal Caribbean (RCL) have also highlighted potential hits to profits from rising fuel costs. Airlines have also been affected, cancelling some services because of the impact of jet fuel shortages. RCL said there was some resilience in the market with demand for luxury Mediterranean cruises holding up. Equity analyst Alex Fasciano of US-headquartered research firm CFRA Research was cited by Reuters in a 30 April report as saying,