The Caribbean Development Bank is projecting gross domestic product growth of 9.1 percent across its 19 borrowing member countries in 2022, accelerating the regional economic recovery that started last year.
This figure, however, factors in a wide variety of economies, including oil-exporting countries like Guyana and Trinidad and Tobago. The GDPs of primarily service-oriented CDB members, such as the Virgin Islands, are expected to grow more modestly, at 4.8 percent, as tourism continues to return to the region, the bank stated.
“However, the return of international passenger arrivals will depend on the acceleration of vaccination rates; effective management of the pandemic without resorting to full and lengthy lockdowns; and continued confidence in protocols established for safe travel to the region,” CDB Director of Economics Ian Durant said in a statement.
Oil-exporting countries are expecting to see a surge in production, leading to a growth of 17.5 percent last year.
In 2021, exporting economies grew by 3.2 percent and service economies grew by 2.7 percent, according to the CDB. The average rate of growth across all countries was three percent last year.
According to Mr. Durant, “A key lesson from the impact of the pandemic is that those countries entering the pandemic on a strong macro-fiscal footing fared better in weathering the headwinds.”
The growth in 2021 of service-oriented economies, he said, was due to a rebound in the hospitality and wholesale and retail trade sectors, buoyed by an almost 10 percent increase in tourist arrivals between January and September compared with the same period in 2020.
Infrastructure growth
The growth predicted for 2022 is underpinned by expectations of accelerated implementation of several large infrastructure projects across the region.
“Despite being a challenging year for the region, 2021 witnessed the continuation of a nascent regional recovery that began in the latter part of 2020,” Mr. Durant said. “The combination of easing of border controls and internal lockdown measures and the continued implementation of fiscal stimulus programmes in some BMCs helped regional economies in recovering some of the lost ground in economic activity.”
Bank investment
In 2021, the CDB approved $122.6 million in funding across its BMCs, including $71.2 million in loans and $51.4 million in grants.
Looking ahead to 2022, Director of Projects Daniel Best signalled a major focus on climate investment for member countries, stating that the bank expects to “mobilise up to $150 million in concessional climate finance through those programmes and projects financed from the Green Climate Fund. We are working with BMCs to develop additional pipeline projects for GCF co-financing, to scale up and improve the sustainability of future climate finance flows to the Caribbean.”
In January 2021, the BVI Electricity Corporation announced that it had received $600,000 worth of grant funding through the CDB, provided by the Canadian Support to the Energy Sector in the Caribbean Fund.
Besides the microgrid project, the funding will be directed at providing technical assistance for improving the resilience of the territory’s national transmission grid infrastructure, according to the utility.
Mr. Best said that if successful, the initiative could serve as a model for projects throughout the region.
‘Financing ecosystem’
At the conference, CDB President Dr. Gene Leon said the bank is moving to create a “financing ecosystem” to support the recovery of its BMCs’ economies to “meet immediate needs and propel long-term growth and development.”
Dr. Leon added, “To meet the region’s development needs, and for the attainment of the [United Nations Sustainable Development Goals], we need to approach our financing needs in a wholesome manner, addressing both the existing debt stock problem and flow financing for development. This would require a wide spectrum of financing instruments that is underpinned by a strong regulatory environment and a well-developed financial market infrastructure.”