Caribbean Overview: Development news, research, data

Overview

The Caribbean is a diverse region with significant economic potential and growth opportunities. Gross National Income (GNI) per capita varies from around US$800 to over US$30,000 and most countries rely primarily on tourism, while some on commodity exports. With its stunning scenery and vibrant cultures, the Caribbean is one of the world’s top tourist destinations. Sustainable use of ocean resources, known as the “blue economy,” offers potential for economic diversification, while preserving the region’s environment, as well as further development of other sectors with potential for growth.

COVID-19 pandemic impact in the Caribbean resulted in GDP contraction by as much as 16-20 percent in some countries in 2020. As tourism returned, uneven recovery started in 2021 with average growth in the region recording 9.7 percent. Worsening global economic environment in 2022 slowed the momentum and average growth in 2022 is estimated at 7.9 percent. As recovery continues, levels of debt to GDP started to trend down for most countries. Rising price levels and challenging global environment pose significant challenges as countries work to strengthen fiscal balances, revitalize growth and build resilience against natural disasters and to help cope with climate change.

Caribbean countries are extremely vulnerable to climate change and natural disasters. Extreme weather events are common – the region experienced nine hurricanes at Category 3 and above in 2019-2020, and a record number of named storms in the 2020 hurricane season. When a hurricane strikes, it can wipe out more than the entire annual GDP of a small island and it is often the poorest that suffer the most. Major hurricanes include Irma and Maria in 2017, and Dorian in 2019. In April 2021, the eruption of the La Soufrière volcano in Saint Vincent and the Grenadines has required mass evacuations, and is having widespread impacts on the country’s people, infrastructure, and economy.

Building fiscal and financial resilience and investing in preparedness – be it physical, health-related, or social safety nets – are critical to reducing the large human and economic costs caused by climate change. to the Caribbean also aims to develop new sources of economic growth and high productivity jobs, which will require investing in people and climate adaptation, improving the investment climate and connectivity, and safeguarding the environment.

The World Bank in the Caribbean

Aruba
Bahamas
Barbados
Belize
Cayman Islands (U.K.)
Curaçao (Netherlands)
Guyana
Haiti
Jamaica
Organisation of Eastern Caribbean States (OECS)
- Antigua and Barbuda
- Dominica
- Grenada
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
Sint Maarten
Suriname
Trinidad and Tobago
Turks and Caicos

Last Updated: Apr 14, 2023

As of April 2021, World Bank portfolio in the Caribbean (excluding the Dominican Republic) totals US$2.6 billion in IBRD, IDA, and trust fund financing for 72 projects. In Sint Maarten, the World Bank manages the reconstruction and resilience trust fund financed by the Netherlands.

At the onset of the COVID-19 pandemic, the World Bank worked with Caribbean countries to mobilize rapid financing for health, social protection, and food security crisis response, using a variety of financing instruments. The next phase of support focuses on green, inclusive, resilient recovery measures, including strengthening social protection, reactivating economic activity, facilitating small and medium businesses, adapting to climate change, financial protection from disasters, improved debt management, and improved macro-fiscal sustainability. The World Bank assisted program remains anchored in supporting cross-cutting resilience building and climate change adaptation and mitigation, with technical assistance and investments in human capital development, fiscal sustainability, digital transformation, financial protection and disaster risk management, agriculture, renewable energy, and the blue economy. Details on the World Bank’s support to the Caribbean during the COVID-19 crisis are available in this factsheet.

The World Bank Group’s strategy in the Caribbean focuses on building cross-cutting “360-degree” resilience across four dimensions:

Human Capital Resilience

The World Bank is supporting the Caribbean to build human capital and strengthen the resilience of health, education, and social protection systems. The World Bank has been working with Caribbean countries to enhance the preparedness of their health systems for pandemics as well as natural disasters; to improve the quality of education and health services; and to improve the coverage and targeting of social safety nets.

In response to COVID-19, the Bank has provided rapid financing for the health response to the COVID-19 pandemic. Financing comes from the global COVID-19 Fast Track Facility, contingent financing mechanisms like Cat DDOs, development policy financing, and reallocation of existing project resources to provide immediate support. This funding for the pandemic response has helped countries procure needed supplies to detect, contain, and treat COVID-19, strengthen health systems, and expand social protection for vulnerable groups. The Bank has also provided technical assistance and project support to enhance e-learning during COVID-19 lockdowns.

The World Bank is supporting stronger social protection systems including improving the coverage and targeting of safety nets, and through adaptive safety nets, ensuring recovery measures reach those who need them most. The World Bank is also supporting emergency social assistance programs for those who have lost jobs or been pushed into poverty due to the pandemic but are not covered by other poverty-related programs. This is particularly important as tourism, a major source of jobs and income for the Caribbean, is at a standstill.

Fiscal and Financial Resilience

The World Bank is supporting countries in the Caribbean to strengthen their fiscal frameworks and build buffers to contain the impact of shocks through improved macro-fiscal policies, enhanced debt management, and better public financial management.

The World Bank is supporting Caribbean countries to diversify their economies and facilitate private sector participation and especially access to finance for micro and small enterprises. The World Bank works with countries to improve the regulatory environment for private sector investments, and for financial inclusion and increased access to finance. With the onset of the COVID-19 pandemic, the Bank has been supporting countries through budget support operations, to sustain small and medium enterprises, especially in tourism-related activities, and facilitate an inclusive and resilient recovery.

Innovative disaster risk financing mechanisms are supporting greater fiscal resilience for Caribbean economies. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is a parametric insurance facility that provides quick, short term liquidity in the event of a disaster. Since its inception, CCRIF has made payouts totaling US$197 million.

Physical and Infrastructure Resilience

The World Bank is supporting countries in the region to strengthen preparedness including through early warning systems and projects to mitigate disaster vulnerability risks.

The World Bank is supporting increased physical resilience through ‘Build Back Better’ principles, which are essential to reduce the economic cost of disasters and to ensure that key infrastructure and services can withstand the next storm. Infrastructure works are also generating much-needed jobs for communities during the COVID-19 pandemic.

New engagement in transport and digital transformation is supporting increased connectivity in the Caribbean. The critical importance of digital connectivity has been highlighted by the COVID-19 pandemic.

Environment and Natural Resource Resilience

The World Bank is helping countries in the Caribbean to develop the Blue Economy, pursue economic diversification through sustainable use of ocean resources, protect marine areas, reduce marine pollution, and repopulate coral reefs. Support is being provided for sustainable agricultural practices to boost incomes for small and medium businesses while decreasing deforestation and forest degradation. Technical assistance on nationally determined contributions (NDCs) and climate change strategies is also a core part of the World Bank’s engagement.

Last Updated: Apr 22, 2021

Natural disasters in the Caribbean region have become increasingly intense in the face of climate change. The World Bank engagement in the Caribbean has achieved these results:

The Caribbean Catastrophe Risk Insurance Facility (CCRIF), developed under the technical leadership of the World Bank and with a grant from the Government of Japan has allowed payouts to several Caribbean countries after Hurricanes Dorian, Irma and Maria. The Caribbean Oceans and Aquaculture Sustainability Facility (COAST), is an innovative parametric insurance product developed under CCRIF specifically for fisherfolk in the Caribbean (Grenada and Saint Lucia).

A financial package of more than US$100 million was provided for Dominica, including through the IDA crisis response window after Hurricane Irma in 2017. Contingent credit lines, known as a Cat-DDOs, were approved in 2020 for Saint Vincent and the Grenadines and Grenada, to be disbursed during a national emergency. Two days after the eruption of the La Soufrière volcano in Saint Vincent, the World Bank disbursed the US$20 million Cat-DDO to support the response to the crisis, the first large financial assistance provided to the country following the eruption.

There are projects to support climate resilience and enhance disaster preparedness and emergency response on the islands of Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines. The focus is on making infrastructure more adaptable to extreme weather events and natural disasters and improving government capacity to handle disaster risks.

In Surinam, the Saramacca Canal System Rehabilitation Project aims to support the country to reduce flood risk in the greater Paramaribo area and improve the Saramacca Canal System. It will improve the resilience against flooding by improving the ability of the Saramacca Canal to discharge water efficiently and safely, improving vessel transport, and strengthening the government’s capacity to manage and operate the canal’s drainage system.

The Blue Economy

Harnessing marine resources while preserving the Caribbean Sea can help countries address key challenges such as high unemployment, low growth, food security, poverty, and resilience to climate change.

The World Bank report “Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean” estimates that the Caribbean Sea (including mainland Caribbean coastal countries) generated US$407 billion in 2012.

Ongoing World Bank support to building environment and natural resource resilience in the Caribbean includes:

Banning of single-use plastics and/or Styrofoam containers across the OECS;

Creating an insurance mechanism to include the fisheries sector in Grenada and Saint Lucia;

Building sustainable agriculture practices and competitiveness in Jamaica, Haiti, and the OECS;

Expanding marine protected areas in Belize and strengthening protection and climate resilience of the Belize Barrier Reef;

Preparation of a new regional blue economy project in the Eastern Caribbean to strengthen management and resilience of marine and coastal assets.

Macroeconomic and Fiscal Sustainability

The World Bank Group is working with Caribbean governments and regional partners to help Caribbean countries better manage public spending and reduce their debts to sustainable levels, while protecting poor and vulnerable populations.

The World Bank provided Development Policy Financing to Jamaica, Dominica, Grenada, and Saint Lucia to support reforms to support the COVID-19 response and recovery.

The World Bank is supporting Jamaica’s ambitious reforms to strengthen fiscal sustainability and inclusion, enhance fiscal and financial resilience against climate and natural disaster risks,

In Grenada, a series of budget support operations helped private investment, improved public resource management and boosted resilience against natural disasters.

Growth

The WBG has worked with regional partners to help Caribbean countries facilitate the private sector and trade reforms, while supporting jobs and protecting poor and vulnerable populations.

The World Bank Group is helping improve Jamaica’s competitiveness by facilitating the growth of new and existing businesses. This includes technical assistance for public-private partnerships, ranging from airports to ports, economic zones, water generation, wastewater and sewage, schools, and renewable energy.

The World Bank Group is mobilizing private capital for strategic investments and seeking to more fully integrate Jamaica’s small and medium enterprises (SMEs) into global value chains.

The World Bank Group is supporting diversification of the region’s power sector by increasing the production of renewables and other clean energy sources. In the Eastern Caribbean, this involves the use of commercial-scale solar photovoltaic systems on rooftops in Saint Lucia, Grenada, and Saint Vincent and the Grenadines.

The Entrepreneurship Program for Innovation in the Caribbean (EPIC), with support from the government of Canada, has provided tailored business development support and training to more than 2,100 entrepreneurs across sectors, including in digital and climate technologies. It has also facilitated more than US$4 million in investments raised by Caribbean entrepreneurs.

In Jamaica, the Youth Employment in Digital & Animation Industries Project is building on successful pilots in the Digital Jam and KingstOOn events, with more than 4,000 young Jamaicans engaged in digital enterprises, supporting the growth of the Jamaican animation training and industry.

The World Bank is supporting digital development to help diversify growth and improve public services. Digital projects are underway in the Eastern Caribbean, Haiti, and Sint Maarten.
The World Bank is promoting governance, good international practices, and sector diversification through the Suriname Competitiveness and Sector Diversification Project. By focusing on policy, legal, and regulatory reforms in the mining, agribusiness, and tourism industries, the investment will enable private sector growth opportunities, boost job creation, and benefit more than 200 small and medium enterprises. The project is also building the capacity of key institutions and enhancing business development services.

Human Capital, Inclusion and opportunities for all

Quality education, affordable health care, and equitable social safety nets are key ingredients in building inclusive societies. In the Caribbean, several countries have launched innovative efforts to provide the most vulnerable, including children, with the knowledge, skills, and health they need to excel.

Jamaica’s comprehensive National Strategic Plan for early childhood development is the first of its kind in the region. Jamaica is one of the few countries in the region that guarantees free pre-primary education and has the highest proportion of children enrolled in preschool. The World Bank supported the scaling-up of early childhood development services to help improve parenting, care, and school readiness for children from birth to six years of age, and to provide diagnosis and early stimulation for children at risk.

In Guyana, the World Bank has provided long-standing support in the area of education spanning from early childhood to primary and secondary education, all the way to the University of Guyana. Curricula reform and research programs have included significant contributions from the main indigenous groups.

In Saint Vincent and the Grenadines, support was provided to help 13,000 students and 2,000 teachers adapt to schooling during the COVID-19 outbreak. The World Bank worked with the Government to develop a COVID-19 Action Plan to guide safe reopening. School safety assessment and disaster plans were also revised to ensure that schooling could resume as soon as possible after an emergency.

In 2021, the Bank adjusted its program to support COVID-19 response and recovery in OECS countries. The program in the region had a strong focus on building cross-cutting resilience across the fiscal/financial, infrastructure, human capital, and environmental dimensions. Hence, the active portfolio was already well placed to respond to the pandemic response priorities, including through the activation of Contingency Emergency Response Components (CERCs). Moreover, the Bank reprioritized the IDA program to support COVID-19 response and recovery, closely aligned with the Bank’s COVID-19 Crisis Response Approach on “Saving Lives, Scaling-up Impact and Getting Back on Track”.

In Haiti, the World Bank supported improved nutrition through the provision of 5,100,000 school meals were provided to 170 public 60 community schools during the 2019-2020 school year. During the school closures caused by the COVID-19 pandemic for the months April-June 2020, 62,000 take-home food rations were provided to 82,000 students in 230 projects supported schools.

Through a series of projects in the health sector, the World Bank has supported Haiti to contain the outbreak of cholera, through mobile rapid response teams, community-based support, and increased capacity for disease surveillance. There have been no new laboratory-confirmed cases of cholera since January 2019.

Last Updated: Oct 19, 2022