Why Tourism Can No Longer Carry the Caribbean Economy — And What Must Come Next

By Felicia J. Persaud

News Americas, NY, NY, Thurs. Nov. 20, 2025: The latest Economic Commission for Latin America and the Caribbean (ECLAC) report delivers the clearest warning yet: Caribbean economies must urgently diversify, deepen regional integration, and expand into higher-value exports as global trade undergoes a historic shift.

Tourism Can No Longer Carry the Caribbean

According to the International Trade Outlook for Latin America and the Caribbean 2025, U.S. tariffs – imposed and adjusted repeatedly this year – are reshaping global trade patterns. While major exporters in Asia now face tariffs as high as 100%, Caribbean countries face an average effective tariff of only ~10% when exporting to the U.S. This positions the region for potential export gains in key sectors like apparel, agribusiness, medical devices, and digitally delivered services.

But the report makes another point even more urgent: the region’s overreliance on tourism is becoming economically dangerous.

ECLAC notes that foreign direct investment (FDI) in the region has fallen 53% in 2025 – largely due to global uncertainty, new U.S. trade policies, and a geopolitical climate increasingly hostile to low-diversified economies. Caribbean service exports remain strong, but the bulk still comes from tourism, a sector ECLAC warns is “highly vulnerable to climate shocks, external demand fluctuations, and rising global risks.”

The call is clear: the Caribbean cannot depend on tourism alone in the era of climate change, global volatility, and rising trade uncertainty.

Tourism Can No Longer Carry the Caribbean

The region’s dependence on tourism has always been a double-edged sword – lucrative in good times, devastating in bad ones. Today, that fragility is magnified by a historic convergence of pressures:

Tourism alone cannot withstand:

Climate change – Stronger hurricanes, higher sea levels, reef die-off, saltwater intrusion, and chronic flooding.

Rising insurance costs – Premiums for hotels and coastal assets have more than doubled in parts of the region, threatening closures.

Extreme weather – Hurricane Melissa’s catastrophic destruction in Jamaica underscores the regional vulnerability.

Airline disruptions – Higher costs, route rationalization, and climate-related flight impacts reduce visitor arrivals.

U.S. economic slowdown – The region’s largest tourism source market is tightening its spending.

Geopolitical tension – Tariff wars, instability, and shifting U.S. foreign policy all drive unpredictable shocks.

Cruise ship dominance – Mass tourism keeps growing while local earnings stay disproportionately low.

Each of these forces alone is problematic. Together, they make tourism structurally unreliable as a long-term development strategy.

And the evidence is already here.

Jamaica’s $10 Billion Warning

Jamaica’s government now estimates that damage from Hurricane Melissa will require US$10 billion in reconstruction funding. Hotels, roads, beaches, homes, farms, water systems, telecommunications, and energy infrastructure all suffered heavy losses.

This is not a one-off event – it is the new climate reality. Rebuilding the same tourism-centric model guarantees that:

the next extreme event will wipe out gains again,

governments will remain trapped in recovery cycles,

and long-term growth will be permanently constrained.

The Caribbean cannot keep rebuilding the same economic model that keeps breaking.

So What Comes Next? A Pivot the Region Can No Longer Delay

If tourism cannot carry the Caribbean through the next 20 years of climate and geopolitical volatility, what can? Three pillars now present the strongest path forward — and all align with ECLAC’s recommendations and emerging global market shifts.

1. Agri-Tech & Food Security

ECLAC highlights that the region imports over US$6 billion in food annually — despite fertile land, tropical conditions, and new technologies capable of boosting yields even in drought-prone zones.

A Caribbean agri-tech push can include:

climate-resilient greenhouses

controlled-environment agriculture

agro-processing for export

aquaculture + blue economy tech

digital supply-chain management

smart irrigation and water innovation

This is not theory – investors are already moving into these areas because the opportunity is massive and urgent.

2. Modern Services & Tech Exports

ECLAC’s most troubling statistic: The Caribbean represents less than 2% of global modern service exports. This is the region’s greatest untapped economic engine.

Key opportunities include:

digital outsourcing

fintech and compliance services

medical transcription + health IT

animation, design, digital creative industries

AI-enabled back-office services

These are sectors where:

hurricanes cannot cancel revenue,

diaspora talent is abundant,

and global demand is surging.

3. Nearshoring, Light Manufacturing & Logistics

The U.S.–China trade restructuring and rising tariffs have created a rare opening in Caribbean shipping lanes. The region can scale:

medical device assembly

electronics + small components

apparel and fashion manufacturing

pharmaceutical packaging

logistics hubs tied to Miami, Houston, and Panama

ECLAC estimates these sectors offer the highest potential for “productive transformation” in the next 5–10 years.

The Path Forward

The ECLAC report is both a warning and a roadmap.

The warning:

Tourism – long the Caribbean’s comfort zone—is no longer strong enough to withstand the coming storms, economic or climatic.

The roadmap:

Diversify now.
Strengthen trade links.
Move into higher-value sectors.
Mobilize investment differently.
Solve for resilience, not vulnerability.

The Caribbean can no longer afford to be a single-pillar economy. It must become a multi-sector, export-oriented, climate-resilient region capable of withstanding uncertainty – not collapsing under it.

EDITOR’S NOTE: The writer is a Caribbean-born journalist and entrepreneur, founder of Invest Caribbean, and CEO of ICN Group.