News Americas, New York, NY, Mon. Oct. 28, 2024: The latest International Trade Outlook for Latin America and the Caribbean report from the Economic Commission for Latin America and the Caribbean, (ECLAC), sheds light on the Caribbean’s economic dynamics, spotlighting both growth opportunities and ongoing vulnerabilities across the region.
Key Findings for the Caribbean
Export Growth: Caribbean exports are set to increase by 24%, with Guyana (74%) and Suriname (12%) leading the expansion. However, Trinidad and Tobago, Belize, and Cuba are expected to see export declines, driven by factors like reduced sugar production, falling nickel prices, and energy sector setbacks.
Service Sector Potential: Services, particularly tourism, continue to be a dominant export for the Caribbean, but modern digital services hold significant growth potential. Currently, modern services represent just 10% of the Caribbean’s service exports – the lowest share in the region.
Food and Trade Dependency: The Caribbean remains heavily dependent on food imports, which account for over 20% of total exports in many countries. Rising food costs have heightened food insecurity, with half of the Caribbean population unable to afford a healthy diet as of 2022. Cereal imports meet nearly all the consumption needs in Caribbean island states, except the Dominican Republic. The cost of accessing a healthy diet is especially high in the Caribbean, where it amounts to US$ 5.16 PPP per person per day – 30 percent above the world average. As a result, in 2022, half of the Caribbean population have been unable to access a healthy diet, compared to 26% in South America and Central America and Mexico. The United States.
High Trade Costs: Intra-regional trade is burdened by high costs, particularly in air transportation, where limited competition and high airport fees drive up prices, impeding trade and travel across the region.
The average most-favoured-nation tariff applied to agricultural products in the region was 13.6% in 2023, almost 6 percentage points higher than the rate for non-agricultural products (7.8%). In the majority of the Caribbean countries, average agricultural tariffs are close to 20%, and in some cases higher.
Need for Regional Integration: To reduce trade costs and improve food security, ECLAC advocates for stronger regional integration. Proposed initiatives include a regional food distribution center in Barbados and Guyana, streamlined trade logistics, and regulatory harmonization.
Recommendations for Growth in Modern Services
The ECLAC report highlighted the importance of leveraging the high global demand for modern services to boost economic growth. “To harness high global demand for modern services, the countries of Latin America and the Caribbean should strengthen their productive policies and support programmes in partnership with the private sector,” ECLAC advises. “One effective strategy is to improve the measurement of services trade, in line with international recommendations, and implement policy frameworks that minimize restrictions on trade and FDI. In addition, trade agreements should be modernized, and subregional integration should be explored as a means to facilitate trade in services and avoid double-taxation.”
Furthermore, improving digital literacy is crucial. ECLAC emphasizes the need for “continuous learning programmes to train and equip workers to navigate the rapid technological changes underway” and calls for targeted policies to support services exports, including training programs, trade missions, and branding campaigns. “FDI attraction is essential to bring in new technologies and improve productivity, generating clusters and value chains to drive growth in the services sector, including exports and linkages,” ECLAC concluded.
These insights underscore the Caribbean’s strategic advantage in service sector development and regional trade integration, essential for sustainable growth and resilience.
