by Kari Grenade, PhD, Regional Economist and Macroeconomic Advisor
The International Monetary Fund (IMF) published its flagship World Economic Outlook (WEO) Report on 16 April which provides a comprehensive assessment of global economic performance, prospects, and risks.
The salient message is that the global economy remains resilient, despite the series of unprecedented and compounding shocks it faced since 2020. The IMF estimates global economic growth to remain at 3.2% this year, same as in 2023; a relatively slow rate of expansion by historical standards. For Advanced Economies (AEs), which includes countries such as the USA, Canada, Japan, the UK, and Germany, the average growth forecast is 1.7% this year, a modest uptick relative to the average of 1.6% last year. Of the AEs, the pace of growth is the fastest in the USA, estimated at 2.7% this year, a slight acceleration relative to the 2.5% last year. Underpinning the relatively upbeat forecast for the USA are strong domestic demand, as well as productivity and employment growth among other drivers.
Meanwhile, average economic growth in Emerging Market and Developing Economies (EMDEs) — which include China, India, Brazil, Mexico, South Africa and 151 other countries — is estimated at 4.2% this year, a slight deceleration relative to the average of 4.3% last year. China’s economy, which is the largest of the EMDEs and second largest globally after the USA, is estimated to grow by 4.6% this year, 0.6%age point slower than last year. According to the IMF, the Chinese economy continues to be affected by weak domestic demand and challenges in its property sector among other constraints.
The global growth forecast is subjected to several risks, which the IMF assesses as balanced. On the downside, 2 such risks that can weigh on global growth are heightened geopolitical tensions and rising protectionist trade policies in the context of an increasingly polarised world. On the upside, growth can be positively impacted by a faster-than-projected fall in global inflation, allowing for an easing of monetary policies (lowering of interest rates) by major central banks sooner than is currently expected, which would stimulate credit, consumption, and overall economic activity.
As global economic power continues to shift, the economic performance of both AEs and EMDEs (particularly, but not exclusively China) plays an important role in the economic performance of Caribbean economies. Based on the IMF’s forecasts, the salient headline for the region is that economic growth is estimated for all Caricom independent member countries in 2024, except for Haiti. Average regional growth is estimated at 5.3%, though the pace of economic growth varies significantly among the independent member countries. In nine of the member countries, the 2024 economic growth forecasts are slower than last year’s rates of growth, and as such, the 2024 regional average is a slight deceleration relative to the average of 5.6% in 2023, but well above the 2019 regional average of 1.8%.
The Guyanese economy, which has tripled in size since the start of oil extraction in 2019, is forecasted to expand by 33.9% in 2024, the fastest in the region, while the Jamaican economy is projected to grow at the slowest pace at 1.8%, driven by tourism inflows and growth dividends from the implementation of structural reforms. The general rebound in global tourism underpins the growth forecasts not only for Jamaica, but the other major tourism-dependent economies as well, with estimated growth rates for The Bahamas (2.3%), Barbados (3.7%), Antigua & Barbuda (6.1%), St Lucia (2.4%), Grenada (4.1%), St Kitts & Nevis (4.7%), Belize (3.4%), Dominica (4.6%), and St Vincent & the Grenadines (5.3%). In Suriname and Trinidad & Tobago, where commodity exports are the dominant economic drivers, growth is forecasted at 3.0% and 2.4% respectively. Haiti’s estimated economic decline of 3.0% reflects the country’s ongoing insecurity and governance challenges.
Indeed, the economic growth estimates for the independent Caricom countries (except for Guyana) are not high by standard measures, but they are sufficiently decent considering the series of unprecedented and overlapping shocks the countries have faced since 2020. Barring the materialisation of any downside risks, if the regional growth estimates are actually realised, they will augur well for public revenues, job creation, investment, consumption, and more broadly, the living standards of Caricom citizens, at least in the short term.
