(CMC) — The Barbados-based Caribbean Development Bank (CDB), says it is difficult to predict the duration of the impact of the novel coronavirus (COVID-19) on the Caribbean.
In its 2019 Annual Report, released here, the CDB, the region’s premier financial institution, said that at the start of 2020, it was projecting regional economic growth, consistent with forecasts of increased global economic activity.
“Since then, there has been the rapid global spread of the novel coronavirus, with significant adverse impact on developed and developing countries. With many countries going into lockdown to contain the spread of the virus and to ease pressure on health services, economic activity collapsed.
“Closure of borders led to a rapid decline in international travel, putting pressure on transport providers, particularly airlines. Governments and central banks announced fiscal and monetary policies in an effort to protect businesses and workers,” the report noted.
It said “the impact on the Caribbean region was significant,” noting that many tourism dependent economies reported mass cancellations.
“Hotels had become virtually empty by March, and cruise ships ceased to operate. Commodity producers were also affected. Guyana made its first delivery of crude oil in January. Since then, a price war between Saudi Arabia and Russia caused prices to decline below the breakeven price in Guyana’s oilfield. “ExxonMobil announced suspension of construction of its headquarters at Ogle, and exploration and production budgets of other operators were cut. Trinidad and Tobago, which is heavily dependent on oil and gas, is likely to experience economic contraction,” the CDB said.
It said that the duration of the impact is difficult to predict; but foreign exchange earnings, income, employment, public sector indebtedness, and government revenues and expenditures are likely to be severely affected.
“Tourism recovery will depend on the extent to which the outbreak is contained in major source markets — Canada, European Union, United Kingdom (UK), and United States of America (US) — how quickly economic activity recovers, and renewed confidence in the safety and security of these markets.
In the meantime, the CDB said that its borrowing member countries (BMC) have taken action to minimise the adverse impact by boosting social protection for those that have lost their jobs.
“They also eased credit conditions and provided tax breaks to businesses and individuals. These measures to mitigate the impacts must be balanced against the availability of buffers, especially foreign reserves.”
The CDB said in the medium term BMCs need to return to the theme of building resilience.
It said disaster preparedness and healthcare systems will need to be fortified, possibly using enhanced digital technology. Parametric insurance and contingent credit facilities should be broadened to cover pandemics.
“In addition, increased emphasis must be placed on promoting private sector development and new sources to earn foreign exchange by, for example, diversifying the economic base and strengthening the regulatory and institutional framework,” the CDB noted.