(CMC) – The Caribbean Development Bank (CDB) is projecting an average gross domestic product (GDP) growth of 3.8 per cent in 2021.
This, it said, follows an extremely difficult year in which the economies of its 19 borrowing member countries (BMCs) contracted by 12.8 per cent on average due to the onset of COVID-19.
However, the bank said this projection, made in Part 1 of CDB’s Regional Report: 2020 Review and 2021 Outlook released today, is clouded by the ongoing uncertainty caused by the global pandemic.
According to the CDB, in 2020 the majority of BMCs registered double-digit declines in GDP. It said countries with significant tourism industries such as The Bahamas, Barbados, Belize, Cayman Islands, Dominica and Grenada were hard-hit by a more than 70 per cent drop in overnight visitors in 2020, which spilled over to affect other economic sectors.
It noted that an increase in agricultural production in Jamaica could not prevent the economy shrinking by 10.4 per cent and that agriculture in Belize was affected by a severe drought from the previous year, and then a reduction in tourism-related demand. The CDB said the economy contracted by 13.3 per cent.
But the bank noted that Guyana was the only economy to record economic growth (26 per cent), solely due to the start-up of its first oil production. However, it said the growth was lower than expected due to lower global oil prices.
The bank reported that declining oil prices also caused economic contraction of 11.1 per cent in Trinidad and Tobago. It said Guyana also saw mixed performances in agriculture — sugar production fell while rice production rose.
The report further noted that in Haiti the pandemic affected manufacturing supply chains. This, it said, compounded the effect of social unrest on the economy early in the year.
“Across the region, the fall in economic activity led to a steep decline in government revenues. At the same time governments increased expenditure to support health sectors, and to provide social support and economic stimulus. Primary fiscal balances worsened in every BMC, averaging -4.1 per cent of GDP compared with -1.3 per cent in 2019. Increases in unemployment rates were recorded in many countries, including The Bahamas, Belize, Cayman Islands, Grenada and Jamaica, and are expected in most others. Unemployment rates were generally higher for women and for young people,” the regional bank said in its report.
“In 2020, debt rose in every BMC except Guyana. The regional debt-to-GDP average moved from 66.5 per cent to 79.5 per cent. In Barbados debt reached almost 150 per cent of GDP. While regional debt is projected to continue rising to 81.5 per cent of GDP in 2021, debt-to-GDP ratios are expected to fall in seven countries, with the steepest decreases in Barbados by 8.3 points to 141.2 per cent and in Jamaica by 6.7 per cent to 97.4 per cent,” the report said.
The bank said that while does not expect a return to 2019 tourism levels this year, tourism-dependent BMCs will experience some economic recovery, led by Anguilla, where GDP is expected to increase by 10.9 per cent.
It said this recovery is underpinned by a gradual return of tourists, which is expected in the fourth quarter of the year, and focused efforts to roll out mass vaccination programmes throughout the region. However, it explained that recovery is subject to risks, such as new waves of infection and possible new variants of the virus, and widespread availability of vaccines for some countries.