Caribbean Investment Forum Magazine

The COVID-19 pandemic has only served to exacerbate our challenges and in 2020 the economy of Caribbean Small States contracted by 9.3%. A recovery of 5.2% in 2021 has been promising, however much ground has been lost. In 2019 the average GDP per capita purchasing power parity of Caribbean Small States was US $18,609. In 2020 it slumped to $16,468 but rebounded to $17,918 in 2021. However, this rebounding is due largely to four countries which experienced double digit recoveries – The Bahamas, Dominica, Guyana (the largest at 24%) and St. Lucia. Removing those four countries, the average for the remaining countries stood at $16,478, just $10 more than the average for all Caribbean Small States in the pandemic year 2020. On the positive side, we have recognised the need to make this change. In fact, since 2013 CARICOM countries have agreed on a regional energy policy which set out priorities for decarbonisation and energy e ffi ciency while enhancing energy security. In the 2015 Caribbean Sustainable Energy Roadmap and Strategy which would follow, Caribbean countries agreed to a cumulative target of 47% electricity generation from renewable energy sources by 2027. In addition, Caribbean countr ies, l ike many others, developed nationally determined contributions (NDCs) and became party to the Paris Agreement. The overarching goals of NDCs vary by country, and range in ambition from net-zero by 2040 (Antigua and Barbuda) to a 7% reduction of GHG emissions by 2030 relative to a 2010 baseline (Saint Lucia). Some NDC targets abandon a baseline year in favour of a business-as-usual projection at 2030 (for example, Jamaica, St. Vincent and the G r e n a d i n e s , T r i n i d a d a n d T o b a g o ) . Nonetheless, Car ibbean countr ies have r ecogn i z ed t he need t o mak e t he s e c omm i tme n t s . No t w i t h s t a n d i n g t h e contribution to climate change mitigation e ff orts, it is strategically advantageous to embrace the new economy o ff ered by low carbon industries and sectors.

A New Economic Turn

eismic shi ft s are taking place in the global economic archi tecture as count r i es acce l e r ate e ff o r t s to transition clean and green economies. In 2015, at the United Nations Cl imate Change Conference known as COP21, world leaders signed the landmark Paris Agreement. This pact signal led the col lective ambition of 196 countries to contribute to the goal of limiting global warming and e ff ectively addressing climate change. The implication for the global economy was immense given the need to transition away from fossil fuels. S To achieve this reduction, countries have developed targets to bring down emissions associated with fossil fuels known as the nationally determined contributions (NDCs). The United States, one of the major hold outs in this transition has taken a welcome about turn with the Biden Administration which has already established ambitious targets. The decision of the United States to fully embrace a cleaner and greener economy would only hasten the transition. It should be noted that those who have embraced the shi ft to renewables also recognise the massive economic opportunities it presents in what will be a new economy. Given our own climate vulnerability and economic challenges as small island developing states, we have no option but to do the same. There is also a strong economic case for doing so given our own economic performance and the need for new options. According to the World Bank, over the period 2009-2019, the economies of small states in the Caribbean grew by less than half of one percent or at an average rate of 0.38%, to be more precise. By comparison, the average growth rate of all small states globally over the period was 3.08%.

CARIBBEAN INVESTMENT FORUM

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