A new Inter-American Development Bank (IDB) report has warned that Caribbean countries should prepare for the prolonged effects of external economic shocks in 2023.
Those shocks include high food and fuel prices and rising international interest rates.
According to the IDB, higher interest rates could lead to economic slowdowns, or even recessions in important source markets for exported services and goods from the Caribbean.
The Bank’s report has as its title: ‘ Headwinds Facing The Post-Pandemic Recovery.’
It observed that the impact of economic shocks would depend on the trade structure of individual countries and their external financing requirements.
“Hopefully, these unfortunate external conditions will improve during 2023,” said David Rosenblatt, the regional economic advisor for the IDB’s Caribbean Department.
Rosenblatt explained that, as with natural disasters, it is always prudent to prepare for the worst, even while hoping for the best.
The authors of the IDB report put forward several reform priorities.
The priorities included continued attention to fiscal consolidation and debt management on the macroeconomic dimension.
The authors also advised targetted interventions to help households cope with the effects of rising food and fuel prices.