South Booms, North Glooms

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• The Unexpected Rise of the World’s Fastest-Growing Economy

• The Dangerous Shadow Over Mexico’s Judiciary

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Best,

The GCaM Team

With a population of just 800,000, Guyana has gone from being one of the continent’s most underdeveloped economies to topping global growth rankings.

Panorama. A decade ago, thousands of citizens sought better opportunities in neighboring countries. Today, engineers, technicians, and skilled young professionals are returning, drawn by the boom in the oil industry.

• According to the IMF, since 2022 the country has maintained an average annual growth rate of 47%. In 2024 alone, its economy expanded by 58%, driven primarily by a surge in oil production. From producing nothing in 2019, Guyana is now pumping 650,000 barrels per day.

• The coastal nation is on the verge of surpassing the United States in GDP per capita adjusted for purchasing power parity (PPP).

• This figure has soared from a modest USD 12,000 in 2017 to USD 80,000 today.

Between the Lines. Even with its impressive growth, Guyana’s case must be interpreted with caution. It does not imply that its citizens enjoy U.S.-level living standards. As in Ireland’s case, the country’s GDP is skewed by the outsized presence of multinational corporations.

• A significant share of revenues flows abroad as dividends, landing in the hands of shareholders of the oil companies operating in the country—or, at best, is reinvested in the sector itself.

• Whether Guyana can balance rapid growth with long-term stability remains an open question.

What’s Next. Notably, the government has established a sovereign wealth fund—the Natural Resource Fund—which now exceeds 12.5% of GDP and has accumulated over USD 3.1 billion.

• The key lies in viewing oil not as a guarantee, but as a lever. Wisely, Guyana has channeled its revenues toward long-term investments in infrastructure, healthcare, and education. The government is pursuing responsible fiscal policies and avoiding excessive debt—an approach praised by the IMF.

• Growth is also spreading beyond the oil sector. Last year, the non-oil economy grew by 13%, with projections of a 6.75% annual growth rate through 2030.

• In a region where natural wealth has not always translated into public well-being, Guyana is betting on transparency, diversification, and prudent investment.

Yes, But. One of the country’s main challenges is a shortage of skilled labor, driven by the breakneck pace of growth.

• Companies have been compelled to source talent from abroad, underscoring the urgent need for greater investment in local workforce development.

• Also, while inflation remains under control at 2.9%, the country continues to face the structural risk of relying heavily on a single resource—particularly vulnerable to price collapses or geopolitical shocks.

Bottom Line. What’s happening in Guyana is drawing global attention. In addition to the IMF, consulting firms and universities are studying the country as a case of how to turn natural resources into sustainable development.

• Its trajectory draws comparisons to that of Norway, which used its oil wealth to fund public welfare and intergenerational savings.

• Can the country maintain this balance between rapid growth and stability? It’s no small matter. If it succeeds, it will stand as an example for its Latin American neighbors.

The palm oil industry, which accounted for over USD 1.6 billion in exports for Latin America and the Caribbean in 2023, has come under intense scrutiny over the past decade.

• Media outlets, environmental groups, and international NGOs have issued hundreds of accusations and often portrayed a questionable version of reality in communities near palm plantations.

• República’s team traveled to one of the most remote regions of Guatemala to speak with these communities and uncover the truth.

The GCaM team strongly recommends watching this 12-minute short documentary, which sheds light on a widespread issue across Latin America’s agribusiness sector: how irresponsible narratives from media and advocacy groups can endanger the social and economic well-being of the region’s most vulnerable communities.

Mexico is undergoing a clear institutional decline that now endangers one of the foundational pillars of its republic: the judicial system.

Why It Matters. On June 1, Mexicans will vote to elect judges for 850 federal positions, nine Supreme Court seats, 22 key roles in high courts — including disciplinary tribunals — and thousands of posts in lower courts.

• A second round of elections in 2027 will complete the full overhaul of the judiciary.

• This sweeping reform, initiated by former President López Obrador and continued by Claudia Sheinbaum, makes Mexico the first country in the world where all judges are chosen through direct popular vote.

• The change will redefine the balance of power, judicial independence, and public trust in institutions — in a country where justice is already fractured.

Between the Lines. Electing judges at the ballot box is a double-edged sword. It risks weakening the rule of law and Mexico’s economic stability.

• Judges subject to public opinion and campaign dynamics may prioritize popular sentiment over the strict application of the law, undermining their ability to protect fundamental rights or check abuses of power.

• In a political landscape dominated by Morena, judicial independence risks becoming a fiction, enabling the Executive to consolidate unchallenged control.

• This scenario deters foreign investment, which depends on legal certainty and an impartial judiciary. Bolivia — the only other country where high court judges are elected (though not the entire judiciary) — offers a sobering precedent. There, the justice system is trapped in political disputes that have eroded its legitimacy. Mexico may be headed down a similar path, sacrificing legal certainty for a judiciary shaped by political influence.

What’s Critical. The most dangerous aspect of these elections is their potential to further empower organized crime. Drug cartels — already infiltrating local elections with their own candidates — are likely to threaten, bribe, or promote judges who serve their interests.

• The candidate selection process, loosely regulated and controlled by Morena, has already allowed individuals with criminal ties to appear on the ballot — a troubling sign of institutional vulnerability.

• Only a law degree, five years of experience (even for the Supreme Court), and a few letters of recommendation are required to run — an insufficient filter to guarantee integrity.

• With more than 90% of crimes going unreported and only 14% of reported cases leading to convictions, Mexico’s weakened justice system is at risk of becoming an instrument for the cartels.

The Bottom Line. The upcoming judicial elections mark a dangerous inflection point for Mexico. Subjecting the judiciary to electoral dynamics undermines its independence, facilitates criminal influence, and weakens the rule of law.

• This move further cements Morena’s dominance and steers the country toward a concentration of power that endangers its democratic foundations.

• Mexico, long resilient in the face of crisis thanks to its institutions, now risks its future on a political experiment that could come at a high cost.

• On June 1, Morena may consolidate what some are calling the “perfect dictatorship” — one that even the PRI never fully achieved.

What We’re Watching 🔎 . . .

Remittance Tax Plan Poses Threat to US Allies in Central America [link]

Michael McDonald y Kelsey Butler, Bloomberg 

A Republican legislative proposal in the U.S. imposing a 3.5% tax on remittances sent by non-citizen foreign nationals was recently approved by the House of Representatives and is now awaiting confirmation in the Senate. This measure would significantly affect economies dependent on these financial flows, such as Mexico, Honduras, Guatemala, and El Salvador, where remittances represent up to 25% of GDP. Widely regarded as regressive, the tax could reduce transfer volumes by up to 10%, encouraging increased use of cryptocurrencies and informal channels, especially among unbanked communities.

Mexico has condemned the proposal as a form of double taxation and announced legal action. While remittances have shown resilience in past crises, the tax could undermine domestic consumption, the financial system, and currency stability.

In countries like El Salvador, where only one-third of migrants are naturalized citizens, the measure exposes a troubling structural vulnerability — putting at risk the remittance flows that sustain bank deposits and aggregate demand.

Will Trump’s tariff climbdown save the US from recession? [link]

Claire Jones, Sam Fleming, Joseph Cotterill y Gregory Meyer, Financial Times

The recent trade agreement between Washington and Beijing has partially eased tariff tensions but has not dispelled economic uncertainty. While Wall Street celebrates, the real economy struggles; companies report rising costs, and consumers face higher prices, exacerbated by the removal of customs exemptions and still-elevated tariffs (17.8%, compared to 2.5% before Trump).

Moody’s has downgraded the U.S. credit rating, warning of rising fiscal deficits. This volatility has weakened investment and consumption, eroding both business and public confidence to historically low levels. Although an immediate recession was avoided, the risk of stagflation remains, limiting the Federal Reserve’s room for rate cuts.

Meanwhile, the dollar’s hegemony faces challenges due to Trump’s controversial leadership, which undermines global trust. However, with no viable alternatives like the renminbi or the euro, its dominance persists more out of inertia than strength.