Eastern Caribbean Currency Union: 2026 Discussion on Common Policies of Member Countries-Press Release; and Staff Report

This paper presents Eastern Caribbean Currency Union’s 2026 discussion on common policies of member countries. The currency union continues to serve as a strong anchor for macroeconomic stability in a shock-prone region, despite emerging pressures. Growth moderated to an estimated 2.8 percent in 2025, supported by construction but increasingly constrained by tourism capacity limits. Growth is projected to moderate further amid elevated downside risks. Real gross domestic product growth is projected to slow to 2.4 percent in 2026 as higher fuel and other import costs triggered by the war in the Middle East weigh on activity alongside binding tourism capacity limits. Strengthening union-wide institutional mechanisms to reinforce fiscal sustainability and resilience is a key policy priority. Deeper policy coordination would help preserve space for public investment and strengthen resilience. Rationalizing costly tax exemptions, especially in tourism, and strengthening social safety nets to reduce reliance on distortionary, untargeted fiscal responses to shocks would improve fiscal performance and efficiency.