The Caribbean is one of the most vulnerable regions to climate impacts in the world, despite its limited contribution to global greenhouse gas emissions. Climate-related extreme weather events in the region increased by 85% in 2001-20 compared to 1980-2000. Natural disasters cost an annual average of 2.13% of regional GDP from 1980 to 2020, with deep social negative impacts, especially on vulnerable populations. These costs underscore the need to build regional resilience through ambitious adaptation measures, resilient infrastructure, and strong early warning systems. The region’s rich biodiversity and natural endowments – hosting almost 10% of the world’s coral reefs, and around 45% and 25% of the fish and coral species, respectively – provide the basis for developing new activities in renewable energy, sustainable tourism and transport, the blue and circular economy, and nature-based solutions.

The well-being of the average Caribbean citizen has improved over the last three decades, although heterogeneity is large across countries. In 2022, the average Caribbean person could expect to live 72.6 years (an increase of 4.2 years since 1990), and to complete 14.1 years of education (an increase of 2.9 years). In addition, the mean GNI per capita stood at 17 280 constant 2021 international USD (a 66% increase compared to 1990). However, important socio-economic gaps remain: almost one in four people are poor in the Caribbean on average, and 37% live in moderate or severe food insecurity (33% in Latin America). On average, almost one worker in two has an informal job (47.2%, against 57% in Latin America) and more than a third (34.1%) of the population lives in households where all workers are informal. Women face many obstacles – from gender-based violence to unequal pay and limited access to education and health care. In 2022, they held 23.7% of parliamentary seats on average (31.7% in Latin America).

Potential growth in the Caribbean is relatively low and has been declining. Potential GDP per capita growth is estimated at around 1.4%, slightly above the Latin American average (1.1%) and below that of advanced economies (1.8%). This is associated with limited levels of labour productivity in the Caribbean, representing 46% of the OECD level in 2023. Public debt remains high, although with substantial heterogeneity across countries and with several among them embarked on important consolidation efforts. In 2022, the average central government debt was 78.8% of GDP, well above the average for Latin America (52.9%). Debt service is also high: in 2022, the average debt service-to-tax revenue ratio reached 12.9%, higher than in Latin America (11.5%) and well above the OECD average (4.8%). Caribbean countries are mostly service-based and commodity-exporting economies. In 2022, services represented between 55% and 78% of total GDP for most countries, and tourism was the main economic activity for many of them, representing on average 25.4% of the Caribbean GDP between 2015-19. Natural resources – especially oil and gas – play a significant role in some countries, notably in Guyana, Trinidad and Tobago, and Suriname. Agriculture remains relatively large for Belize, Dominica, the Dominican Republic and Guyana.

Citizen satisfaction with democracy and public services has declined. In 2023, 65% of people, on average, expressed low satisfaction with the democratic system, an increase of 22.6 percentage points (p.p.) in the last decade. In 2023, only 40% of Caribbeans were satisfied with health services, declining by 15.4 p.p. in the last decade. Satisfaction with education is higher (65.2%, on average in 2023) although it fell by 9.5 p.p. Citizen security is paramount, as several Caribbean countries rank among those with the highest per capita average murder rates globally. The average cost of crime is estimated at 3.7% of the region’s GDP. Better data are key for informed policy design, implementation and monitoring. In 2021, only half of the Caribbean countries with data available were implementing a statistical plan. Strengthening national statistical offices and open government practices with intra-regional collaboration and digital transformation will be key in promoting citizen engagement and better public services, and, ultimately, strengthening the social contract.

In 2022, average tax revenues in the Caribbean were 21% of GDP, below Latin America (22.4%) and the OECD (34%). Tax systems can be made more equitable and efficient, by enhancing direct taxation, rationalising tax expenditures and fighting tax avoidance. Caribbean countries have spearheaded the development of innovative debt instruments. Green, social, sustainability, sustainability-linked, and blue bonds represented a cumulative USD 1.5 billion in the region from 2019 to August 2024. Other tools include climate-resilient debt clauses, which allow for payment deferrals following disasters, or debt-for-nature swaps to advance environmental goals while reducing debt. Regulatory frameworks and sustainable finance taxonomies will help ensure transparency and attract investments. Financial depth in the Caribbean remains low, constraining households’ and firms’ access to finance. Domestic credit to the private sector was 42% of GDP in 2022, below Latin America (55%) and the OECD (149%).

The Caribbean’s participation in world exports has declined from a peak of 0.35% in 1984 to 0.23% in 2022, with intra-regional trade decreasing to 6.7% of total trade in 2015-18. Developing regional value chains in strategic sectors, reducing non-tariff barriers and improving trade facilitation should be priority areas. Regional co-operation can help address challenges like transport, digital connectivity and disaster risk reduction. Transport costs are high, with logistics costs representing 16-26% of GDP (9% in the OECD). Public-private partnerships can enhance transport connectivity. Regional co-operation can also help build climate resilience, for instance through joint early warning systems. Digital technologies offer an opportunity to drive productivity, production diversification and economic integration. Caribbean countries can also foster a cohesive voice in ongoing discussions to transform the international financial architecture.