Even though the economies of its 19 Borrowing Member Countries (BMCs) contracted by 12.8% on average following the COVID-19 pandemic, the Caribbean Development Bank (CDB) is projecting an average gross domestic product (GDP) growth of 3.8% for 2021.
This was noted in Part 1 of CDB’s Regional Report: 2020 Review and 2021 Outlook which was released today.
According to the financial institution in its latest report, the majority of BMCs registered double-digit declines in GDP last year. In fact, countries with significant tourism industries, such as The Bahamas, Barbados, Belize, Cayman Islands, Dominica, and Grenada, were hard-hit by a more than 70% drop in overnight visitors, which spilled over to affect other economic sectors.
The bank said that Guyana was the only economy to record economic growth (26%), solely due to the start-up of its first oil production. However, it said that growth was lower than expected due to lower global oil prices while adding that this factor also caused an economic contraction of 11.1% in Trinidad and Tobago. Looking ahead it said that expected oil price increases along with production expansion should contribute to projected GDP growth of 8.4% for Guyana in 2021. Higher oil prices will also support modest economic growth of 0.3% in Trinidad and Tobago.
With respect to debt, the CDB said that this rose in every BMC except Guyana. Expounding further, it said that the regional debt-to-GDP average moved from 66.5% to 79.5%. While regional debt is projected to continue rising to 81.5% of GDP in 2021, CDB said that debt-to-GDP ratios are expected to fall in seven countries, with the steepest decreases in Barbados by 8.3 points to 141.2% and in Jamaica by 6.7% to 97.4%.
When the pandemic diminishes, the bank said that countries must continue to address the enormous economic challenges that confront the Region while adding that structural reforms are required to address the development constraints limiting productivity and growth.
