Economic growth to hold steady in 2025, challenges remain

The United Nations’ World Economic Situation and Prospects 2025 report, released today, projects that economic growth in the Caribbean (excluding Guyana) will remain unchanged at 2.5% in 2025, matching the estimated growth for 2024. This forecast comes as part of a broader analysis of global economic trends conducted by the UN Department of Economic and Social Affairs (UN DESA) in collaboration with other UN agencies.

While this growth rate significantly outpaces the 0.5% average recorded between 2010 and 2019, the report cautions that it may not be sufficient to address the region’s pressing development challenges and improve living conditions. 

Looking at the broader Latin America and Caribbean (LAC) region, the report forecasts GDP growth to rise from an estimated 1.9% in 2024 to 2.5% in 2025, supported by improvements in private consumption, easing monetary policies, and stronger export growth. However, this growth level remains below the 1.7% average observed between 2010 and 2019, underscoring the continued economic vulnerabilities and constraints facing many countries in the region.

The UN report identifies high debt levels and vulnerability to climate shocks as key factors constraining progress towards achieving the Sustainable Development Goals (SDGs) in the Caribbean. Public debt in the region stood at an average of 67.9% of GDP, signaling a return to pre-pandemic levels. The report warns that this high debt burden, coupled with increasing interest payments as a share of fiscal revenues, is limiting the financial resources available for critical investments in education, health, infrastructure, and sustainable development.

Despite these challenges, the report notes some bright spots in the region. Guyana, which is excluded from the overall Caribbean growth figure, is projected to maintain GDP growth above 3.5% in 2025, outperforming its regional counterparts.

The UN report also highlights limited macroeconomic policy space across the LAC region, which constrains government capacity to advance public investment and support growth. This is particularly relevant for many Caribbean nations given their high debt levels.

Fiscal deficits in the Caribbean are estimated to have increased by 1 percentage point to 2.6% of GDP in 2024, further underscoring the economic challenges faced by the region.

External factors such as a sharper-than-expected slowdown in China and the United States could negatively affect exports, remittances, and capital flows across LAC. For the Caribbean specifically, the report emphasizes that climate-related shocks pose an elevated threat, potentially straining fiscal policies and disrupting agricultural production, which could drive up food inflation in these island economies.

Caribbean nations also face the challenge of maintaining economic stability while addressing long-standing structural issues. The report suggests that countries in the Caribbean will need to redouble efforts to increase fiscal revenues, partly by reducing tax evasion and avoidance and increasing the progressivity of tax systems.

At the global level, the World Economic Situation and Prospects 2025 report projects that growth will remain at 2.8 per cent in 2025, unchanged from 2024. While the world economy has demonstrated resilience, withstanding a series of mutually reinforcing shocks, growth remains below the pre-pandemic average of 3.2 per cent, constrained by weak investment, sluggish productivity growth, and high debt levels.

Launched globally in a high-profile event at the United Nations headquarters in New York, the UN flagship economic report calls for bold multilateral action to address the interconnected crises of debt, inequality, and climate change. The launch featured a press briefing led by senior UN officials, including Li Junhua, Under-Secretary-General for Economic and Social Affairs, Shantanu Mukherjee, Director of the Economic Analysis and Policy Division at UN DESA, and Hamid Rashid, Chief of the Global Economic Monitoring Branch.

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