Caribbean & Central America - September 2026
REGION: Two or even three-speed growth expected
The United Nations Economic Commission for Latin America and the Caribbean (Eclac) and the World Bank have underlined the different rates of growth between those Caribbean countries exporting energy and those bringing in tourists.
In its annual survey of Latin America and the Caribbean (LAC), which was released on 20 August, Eclac predicts a modest overall performance for LAC, with growth of 2.2% in 2026 and 2.5% in 2027. If these numbers are correct, the region will have averaged 2.3% growth per year over the last five years, not enough for a sustainable increase in per capita income, the closing of development gaps, or the expansion of policy spaces. While global headwinds have been at work this year, Eclac highlights ongoing structural factors, such as low levels of investment and high and persistent labour informality.
According to the survey, there has been “marked heterogeneity” at the sub-regional level. Growth in Central America this year will be only 1.6% (dragged down by the economic and energy crises in Cuba and Haiti, which Eclac includes). Growth in the Caribbean, on the other hand, looks much more impressive at 5.6% in 2026 and 7.9% in 2027. However, that is largely due to Guyana’s oil boom. If Guyana is taken out of the picture, average GDP growth in the Caribbean comes out at 1.1% in 2026 and 2.2% in 2027. Eclac points out that high levels of debt, a worry for all of Latin America, are particularly pronounced in the Caribbean, where the average debt-to-GDP ratio stands at 73%.
In its latest post on its Caribbean webpage, the World Bank talks of an “increasing divergence” between “resource-rich producers” and “tourism-dependent economies”. It adds that the latter are experiencing moderate growth due to high import and energy costs. The discussion around a two-speed Caribbean is not new. Some economists have even spoken of three speeds: one, the oil exporters like Guyana and Suriname; two, the large, diversified tourism economies like the Dominican Republic; and three, the small tourism-dependent economies like St Lucia or Dominica.
The World Bank also speaks of underlying structural challenges. Growth has been slow and public debt remains high, although it forecasts Caribbean GDP growth of 4.4% in 2026 and 7.3% in 2027. Natural disasters are frequent and capable of erasing an entire year of economic output, and electricity costs are the highest in the region due to dependence on imported oil. To tackle these problems, the World Bank recommends policies to promote private-sector investment and jobs. Job creation, the World Bank says, should focus on sectors such as tourism, agriculture, and the creative industries. Disaster resilience should also be strengthened.
El Niño weather pattern already affecting the Caribbean
According to the World Meteorological Organisation (WMO), there will be drier-than-normal conditions this year and into next. The weather will be hotter, increasing the risk of drought and wildfires. Interestingly, this El Niño cycle may reduce hurricane risk due to increased vertical wind shear over the tropical Atlantic.
The overall El Niño impact on tourism will likely be mixed. If there are fewer hurricanes, that will be positive for airlines, hotels, and tour operators. On the other hand, increased drought and wildfires may cause water shortages and put pressure on infrastructure, creating particular difficulties for the smaller islands with limited access to freshwater.