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The first case of HIV/AIDS in the Caribbean was reported in Jamaica in 1982. Since that time, the epidemic has spread rather quikly throughout the Caribbean region. At the end of 1996, a total of 9,978 cases of AIDS was reported to CAREC by nineteen of its member countries. Trinidad and Tobago, the Bahamas and Jamaica have reported the largest number of cases since the onset of the disease. In many of the member countries of CAREC the under-reporting of AIDS cases has been a problem and the number or HIV infections represent only a small percentage of the true figures. Several attempts have been made in the Caribbean to project the incidence and prevalence of the disease. This paper has two main objectives. The first is to present an alternative behavioural model for projecting the incidence of HIV while the second is to analyze the impact of HIV/AIDS on the macroeconomy.