The Caribbean is experiencing a two-speed economic recovery, with oil-producing Guyana and Suriname recording strong growth while tourism-dependent economies face a more moderate outlook amid high energy and transportation costs and softer tourism demand, according to the World Bank.
In its October 2026 Latin America & the Caribbean Economic Update, the World Bank says the divergence is particularly evident across the Caribbean, where oil-driven expansions contrast with the more mature post-pandemic recovery of tourism-dependent island economies.
Guyana’s gross domestic product (GDP) is projected to expand by 23.7 per cent in 2026, 18.7 per cent in 2027 and 15.3 per cent in 2028.
Suriname is forecast to grow by 3.9 per cent this year and 4.6 per cent in 2027, before accelerating to 21.5 per cent in 2028.
The outlook is considerably more moderate for several tourism-dependent Caribbean economies.
The Bahamas is projected to grow by 3.0 per cent in 2026, Barbados by 2.0 per cent, Dominica by 3.0 per cent and Grenada by 3.3 per cent.
Saint Lucia is forecast to grow by 1.1 per cent this year, following a contraction of 0.6 per cent in 2025. The World Bank projects growth of 2.1 per cent in 2027 and 1.9 per cent in 2028.
St Vincent and the Grenadines is expected to record growth of 2.6 per cent in 2026 and 2027, while Trinidad and Tobago’s economy is projected to contract by 0.2 per cent this year before growing by 2.5 per cent in 2027.
Jamaica is also expected to contract in 2026, with GDP projected to decline by 0.8 per cent, before recovering with growth of 3.0 per cent in 2027.
The World Bank projects Latin America and the Caribbean as a whole will grow by 2.2 per cent in 2026, slightly below the 2.4 per cent recorded in 2025.
The report says tourism-dependent Caribbean economies continue to face high energy and transportation costs, while tourism demand has softened as the post-pandemic recovery matures.
At the same time, countries across the region face limited fiscal space and high real borrowing costs, which are constraining private demand and investment.
The World Bank also warns that inflation remains a concern, with the pace of disinflation slowing across Latin America and the Caribbean. Persistent services inflation and volatility in global energy and food prices could cause central banks to slow or pause monetary easing.
El Niño also poses risks, with the World Bank pointing to potential disruptions from drought, including effects on agriculture and hydropower, as well as episodes of excessive rainfall.
Despite the challenges, the report says the region has opportunities to strengthen its external sector, noting the resilience of export volumes and the opening of new trade corridors.
AI opportunity
The World Bank also identifies artificial intelligence (AI) as a potential new source of productivity growth for the region, including Caribbean economies.
But it cautions that access to AI alone will not automatically translate into higher productivity.
The report says the region’s main constraint is its ability to absorb and adapt the technology, pointing to weaknesses in human capital, management skills, digital infrastructure and data systems.
AI adoption is already spreading rapidly across Latin America and the Caribbean, but much of the use remains shallow. Businesses often use AI for basic activities such as drafting text and finding information rather than integrating it into core business operations.
The report points to the potential of what it calls “small AI” – low-cost, practical applications designed to address specific problems in low-resource settings.
Such applications could extend access to specialised expertise for small businesses, workers and public service providers, including through basic mobile phones.
The World Bank says governments should focus on adapting existing AI technologies to local languages and institutional needs rather than attempting to develop costly frontier AI models themselves.
It also recommends investing in worker training, digital infrastructure, data governance and cybersecurity, as well as targeted technical assistance to help small and medium-sized businesses adopt AI more effectively.
The World Bank says these measures will be critical if the region is to use AI to raise productivity rather than deepen existing economic inequalities. (CMC)