CARIBBEAN ECONOMIST and adviser Marla Dukharan is warning that the Caribbean will face a higher cost of living imported from its main trading partner the United States (US).
Dukharan outlines this in her latest monthly economic report, which was published last week as the US Bureau of Labour Statistics revealed that US inflation ended January at three per cent, the highest it has been since June last year.
This means that Americans ended last month paying higher price increases for food, energy and other items.
Dukharan said that US President Donald Trump’s trade or anti-trade policies, including increased tariffs “are expected to drive US inflation higher this year, and this supply side inflation is unlikely to respond to any hikes in the Fed Funds rate”.
“But hike they will in the face of inflation, and the cost of living for the average American will again take flight and be imported by Caribbean people,” she advised.
“Already this region has faced the highest inflation globally for the past ten years, and the social, economic and demographic implications of this inflation are not positive.”
Central Bank of Barbados Governor Dr. Kevin Greenidge reported recently that inflation was 1.4 per cent at the end of December.
The Central Bank’s 2025 outlook is that “the domestic inflation rate is expected to slow further, with the 12-month moving average stabilising between two and three per cent by year-end”.
“This forecast assumes easing international food and energy prices from their 2022 peaks. However, global challenges – including escalating geopolitical tensions, potential oil price hikes, and disruptions related to the Red Sea crisis and Panama Canal water shortages – could increase freight costs and impact supply chains,” Greenidge said.
“Domestically, adverse weather could further strain agricultural output, pushing up local food prices.”
Dukharan observed that this year “will be the biggest election year ever for the Caribbean, with Jamaica, Trinidad and Tobago, Suriname, Guyana, St. Vincent and the Grenadines, Anguilla, Belize, Bermuda, Curacao, the Turks and Caicos Islands and the Cayman Islands all holding general elections this year”.
Poverty and hardship
“Cost of living will feature heavily in election campaigns and will drive higher levels of poverty and hardship and greater outward migration, possibly compounding major global demographic shifts,” she said.
“This shift in population domination in the Global South has already brought significant change to global power dynamics, including the strengthening of the BRICS institution, which now includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.
“Thirteen nations have been added as partner countries of BRICS: Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam,” she added.
The economist said that given the changing global dynamics, “arguably, global and local growth forecasts matter little now”.
She said so in the context of the International Monetary Fund predicting global economic growth of 3.3 per cent this year and in 2026.
“The IMF considers a global growth rate at or below three per cent a global recession and expects 3.3 per cent for 2025 and 2026, consistent with the World Bank, the United Nations etc,” she said.
“The global economy will continue limping precariously along the edge of the recession precipice for some time, and while we are not in a global recession or a stagnation, we are in that maddening and boring place where meaningful improvement is unlike in the foreseeable future.”
Her position is that “it’s everything else that’s happening that we need to either mitigate or take advantage of”.
“And it’s the creation of a new global world order that Caribbean people must actively participate in and support, including BRICS and the UN Tax Convention. Otherwise, we will end up being benign bystanders to the creation or destruction of our own future,” Dukharan said. (SC)
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