Rising tensions in the Middle East are already beginning to ripple through global markets, and the Caribbean Development Bank (CDB) says the region may soon begin to feel the effects.
Speaking during the CDB’s annual news conference this week, Acting Deputy Director of Economic Jason Cotton addressed questions on how the ongoing conflict involving Iran could affect the region’s economic outlook and growth projections.
Cotton noted that early signs of pressure are already emerging in the cost of goods.
“In terms of the conflict with Iran, what we’ve already seen is that there has been an uptick in commodity prices… higher than we have seen in the recent past,” he said.
While higher commodity prices may benefit Caribbean countries that export goods and raw materials, Cotton noted that most economies in the region, such as Saint Lucia, rely heavily on services, including tourism, making them more susceptible to economic shocks.
“The majority of our member countries are service-exporting countries. And as a result, that increase in prices would have implications on inflation, it would have implications on growth, it would have implications potentially on tourism demand.”
For service-based economies across the region, rising global prices often translate into higher import costs, putting pressure on consumers, businesses and the overall economy. The effect is particularly pronounced in small island developing states like those in the Caribbean, which depend heavily on imported goods, fuel and other essential supplies.
Cotton cautioned that the situation remains fluid and that it is still too early to determine the full economic impact of the unfolding conflict.
“I think that there still is a lot of uncertainty. So what we do expect is that if it persists, there would be upside and downside risk. But I think we need to wait to see how this situation continues to evolve.”
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