News Americas, New York, NY, Mon. October 28, 2024: The last one International Trade Outlook for Latin America and the Caribbean The report by the Economic Commission for Latin America and the Caribbean, (ECLAC), sheds light on the economic dynamics of the Caribbean, highlighting growth opportunities and persistent weaknesses across the region.
Key findings for the Caribbean
Export growth: Caribbean exports are expected to increase by 24%, with Guyana (74%) and Suriname (12%) leading the expansion. However, Trinidad and Tobago, Belize and Cuba are expected to see declines in exports, driven by factors such as reduced sugar production, falling nickel prices and constraints in the energy sector.
The potential of the service sector: Services, particularly tourism, continue to be a dominant export for the Caribbean, but modern digital services have significant growth potential. Currently, modern services represent only 10% of the Caribbean’s services exports – the lowest percentage in the region.
Addiction to food and trade: The Caribbean remains highly dependent on food imports, which account for over 20% of total exports in many countries. Rising food costs have increased food insecurity, with half of the Caribbean population unable to afford a healthy diet by 2022. Cereal imports meet almost all consumption needs in the Caribbean island states, with the exception of the Republic Dominican. The cost of eating a healthy diet is particularly high in the Caribbean, reaching $5.16 PPP per person per day – 30 percent above the world average. As a result, in 2022, half of the Caribbean population was unable to consume a healthy diet, compared to 26% in South America, Central America and Mexico. United States.
High trade costs: Interregional trade is burdened by high costs, particularly in air transport, where limited competition and high airport charges drive up prices, impeding trade and travel across the region.
The average most favored 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 most 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 hub in Barbados and Guyana, streamlined trade logistics and regulatory harmonisation.
Recommendations for Growth in Modern Services
The ECLAC report highlighted the importance of harnessing the high global demand for modern services to drive economic growth. “To take advantage of the high global demand for modern services, Latin American and Caribbean countries must strengthen their productive policies and support programs in partnership with the private sector,” advises ECLAC. “An effective strategy is to improve the measurement of trade in services, in accordance with international recommendations, and to implement policy frameworks that minimize restrictions on trade and FDI. Furthermore, trade agreements should be modernized and sub-regional integration should be explored as a means to facilitate trade in services and avoid double taxation.
Furthermore, improving digital literacy is essential. ECLAC emphasizes the need for “continuous learning programs to train and equip workers to navigate the rapid technological changes taking place” and calls for targeted policies to support service exports, including training programs, missions commercial and brand campaigns. “Attracting FDI is essential to bring new technologies and improve productivity, generating clusters and value chains to drive growth in the services sector, including exports and connectivity,” ECLAC concluded.
These insights underscore the Caribbean’s strategic advantage in service sector development and regional trade integration, essential for sustainable growth and resilience.
