Caribbean Export Concentration Creates 'Severe Exposure' to Global Economic Shocks, CDB Vice President Warns

The Caribbean region's limited export diversity creates "severe exposure" to external economic turbulence, leaving regional economies with "acute vulnerability" to global shocks, Mr. Ian Durant, Vice President, Corporate Services (Ag) at the Caribbean Development Bank (CDB), has warned.

Speaking recently at the 2nd Wider Caribbean Regional Risk Conference, Mr. Durant revealed that tourism accounts for more than half of the foreign exchange earnings in five of CDB's 19 Borrowing Member Countries, with another seven seeing tourism contribute over 30% of their foreign exchange. The over-dependence presents serious risks given tourism's highly elastic nature during economic downturns, he argued, advising that "the critical policy imperative is to mitigate these risks."

Explaining that the region's economic structure amplifies external shocks, Mr. Durant said, "Our countries are small, open economies with no reserve currencies. The limited diversity in our export mix results in acute vulnerability. Moreover, the dependence on tourism, which is a very elastic product, deepens the troughs when they occur."

This elasticity means that when global economic conditions deteriorate, tourism demand drops more sharply than other sectors, creating cascading effects throughout Caribbean economies that lack diversified revenue streams.

The solution, the CDB Vice President argued, lies in improving regional competitiveness to enable export diversification. He defined competitiveness as the ability of countries to get products to export markets at competitive prices, with required quality standards, and reliable delivery, factors that require robust infrastructure and institutional frameworks.

Mr. Durant highlighted the CARICOM "25 by 25 plus 5" initiative - aimed at reducing food imports by 25% by 2030 (extended from the original 2025 target) - as a practical example of how improved competitiveness could reduce economic vulnerability while potentially creating new export opportunities. The success of this initiative, he stressed, will require comprehensive ecosystem improvements, including enhanced farm extension services and sanitary and phyto-sanitary standards, improved transportation infrastructure and cold storage facilities, and modernised port operations. Other necessities include better access to credit for micro, small, and medium enterprises, streamlined regulatory processes, and strengthened business support organisations.

The CDB Executive emphasised that successful diversification requires intentional policy action and stakeholder engagement, referencing Vision 2030 as a framework for setting "bold, audacious goals" with clear implementation pathways, responsibilities, and milestone tracking.

"We can diversify our economies and reduce risks if we are intentional about creating the ecosystems that would improve competitiveness and exploiting the full potential of the Caribbean Single Market and Economy," he concluded. "It will take some time, but if we are going to mitigate the constant risks thrown at us by the global economy, we must take these steps to diversify our exports."

The 2nd Wider Caribbean Regional Risk Conference was jointly hosted by CDB, CCRIF SPC, and CAF - Development Bank of Latin America and the Caribbean in Barbados on September 3-4, 2025. The hybrid event attracted more than 1400 participants from the government institutions, the private sector, International Financial Institutions, the global development community, and academia.