The World Bank on Tuesday released its October 2026 *Latin America and the Caribbean Economic Update*, offering a mixed growth outlook for the region and outlining a roadmap for harnessing artificial intelligence (AI) as a new engine of long-term productivity and development.
For the Caribbean island nation of Saint Lucia specifically, the report projects a 1.1% economic expansion in 2026 after an estimated 0.6% contraction in 2025. Growth is forecast to accelerate to 2.1% in 2027 before easing slightly to 1.9% in 2028. Across the entire Latin America and Caribbean (LAC) region, the aggregate growth forecast for 2026 stands at 2.2%, though the report underscores that economic trajectories vary dramatically across different countries.
The report notes that within the Caribbean, resource-rich nations like Guyana and Suriname are enjoying robust oil-fueled expansion, while tourism-dependent island economies such as Saint Lucia are stuck in a slower post-pandemic recovery, weighed down by persistently high energy and transportation costs. Against this uneven growth backdrop, the World Bank identifies AI as an underutilized catalyst that could drive new productivity gains and broader economic growth across the region.
However, the international financial institution warns that simply expanding access to AI technology will not automatically deliver improved productivity. The core bottleneck holding back the region is what the report calls “absorptive capacity” — the ability of governments, businesses, and workers to effectively adopt and adapt AI tools to local needs. To lower barriers to entry, the report highlights “small AI” as a promising pathway for developing economies. These low-cost, purpose-built AI solutions are designed to solve specific industry and operational problems, putting specialized expertise within reach of small businesses, frontline workers, and public service providers even through basic mobile devices.
The report does flag key risks, however: if smaller enterprises lack the necessary skills, management infrastructure, and access to resources to leverage AI effectively, most of the economic gains from the technology could become concentrated in a small cohort of large, already highly productive firms, widening the productivity gap across the region. Currently, while businesses across LAC have started integrating AI into their workflows, most adoption is limited to basic tasks like content drafting and information searching, rather than more impactful integration into core business processes. The World Bank cites gaps in managerial expertise and technical knowledge as the primary barriers to deeper, more transformative integration.
Beyond productivity, the report also addresses AI’s impact on the labor market, noting that AI-driven disruption will extend far beyond traditional office-based roles. As AI and physical automation advance, different worker groups will face varying degrees of employment exposure, though roles that require complex physical skills or interpersonal qualities like empathy and community connection are expected to remain far more resilient to automation. To support workers through this transition, the World Bank recommends targeted workforce development interventions, including short-cycle higher education programs and modernized technical vocational education and training (TVET) initiatives, to help workers shift into more resilient occupations.
For regional governments, the report advises against pouring resources into building costly frontier AI models, and instead recommends prioritizing foundational infrastructure that enables widespread, effective AI adoption. Key priorities include stronger data governance frameworks, interoperable digital information systems, secure digital infrastructure, and robust cybersecurity protections. Governments should also support small and medium-sized enterprises (SMEs) to integrate AI into their operations through targeted technical assistance, skills training, and financial support. Additionally, governments can act as “anchor clients” for local AI innovation by expanding digital government services, creating consistent demand that nurtures the growth of local AI ecosystems.
The report concludes that the region’s modest current growth projections reflect existing policy choices rather than the LAC region’s full economic potential. To unlock that potential and capture the broad-based benefits of AI, the World Bank argues that regional stakeholders must invest in human capital, digital infrastructure, and modern management practices, while proactively working to ensure productivity gains from AI are shared across all segments of society.