The Caribbean is navigating an increasingly complex global environment marked by geopolitical tensions, economic uncertainty, climate threats, and shifting international alliances. However, according to economists at the Caribbean Development Bank (CDB), the region’s greatest challenge may be the longstanding structural weaknesses that make it particularly vulnerable to external shocks.
That was the central message delivered during “Shockwaves: How Global Crises Are Hitting the Caribbean,” a special EDGE X by CDB: Analytics Unlocked session held during the Bank’s 56th Annual Meeting in Nassau, The Bahamas.
According to a CDB press release, economists Dr. Oronde Small and Xavier Ajani Malcolm examined the growing number of global disruptions affecting Caribbean economies and explored policy options that could help countries become more resilient.
During the presentation, Malcolm explained that Caribbean nations are facing multiple crises at the same time rather than a single isolated challenge. He pointed to a range of issues affecting the region, including climate-related disasters, America-first trade policies, fragmentation within the multilateral system, the conflict in Iran, U.S. military intervention involving Venezuela and the Caribbean, and the ongoing humanitarian situation in Cuba.
The CDB press release said these external pressures are intensified by several long-standing weaknesses within Caribbean economies. These include limited economic diversification, heavy reliance on a small number of export markets, dependence on imported goods, relatively low productivity levels, and significant informal economic activity.
Trade uncertainty was identified as another major concern. Recent changes in international trade policy, particularly increases in United States tariffs and uncertainty surrounding future tariff decisions, could have negative implications for investment flows, financing costs, and regional trade. Tourism-dependent economies were highlighted as being especially exposed to these developments.
The region’s dependence on imported food and fossil fuels also leaves countries vulnerable to swings in global commodity prices, making it more difficult to manage inflation and economic stability, said the CDB.
The decline in international development assistance was another issue raised during the session. Global net official development assistance fell by more than eight percent in 2024. At the same time, several Caribbean countries experienced significant reductions in U.S. development financing during 2025. These trends could limit access to concessional financing at a time when countries require substantial resources for development projects and climate adaptation efforts.
Climate change remains one of the region’s most pressing challenges. Malcolm noted that Caribbean countries experience significantly higher levels of damage from natural hazards than many other small states. Rising temperatures, stronger hurricanes, and climate-related disruptions continue to pose serious threats to economic growth and development.
He also pointed out that climate-related events affecting major trading partners and tourism source markets can indirectly impact Caribbean economies through lower visitor arrivals and reduced investment activity.
Dr. Small emphasized that recent geopolitical developments have created additional uncertainty for a region that is already highly exposed to external events.
“It’s becoming increasingly clear that these are not episodic events. They are structural features of the global space and have potentially significant implications for [the Bank’s] Borrowing Member Countries,” he said.
Despite the challenges, both economists stressed that there are clear pathways for strengthening resilience. The CDB indicated that recommended actions include diversifying export markets and products, accelerating the shift toward renewable energy, improving food security, increasing productivity and innovation, strengthening climate resilience measures, enhancing public financial management, and deepening regional cooperation.
The economists concluded that countries with strong institutions, particularly robust fiscal frameworks, will be better equipped to withstand current and future shocks. They noted that building resilience will require proactive policy choices and sustained regional collaboration to help Caribbean economies navigate an increasingly uncertain global landscape.
