World Bank Economist Says Caribbean Yet To Recover To The Pre-COVID Era

(CMC) – A senior World Bank official Tuesday said that the gross domestic product (GDP) of the Caribbean has not yet recovered to its 2019 level as the region emerges from being among the hardest hit by the COVID-19 pandemic.

“We are not expecting that to be the case until 2024 and that reflects the overall slow rate of recovery in the region. Part of that is we know that many of the islands are tourism dependent and we had a hard time getting a handle on COVID,” said William Maloney, the World Bank’s chief economist for Latin America and the Caribbean.

He told reporters that many countries in the region are still recording low vaccination rates against the virus that has killed and infected millions of people globally.

He said most were below 40 per cent “which leaves us vulnerable to whatever new variant comes. It is important to realise that COVID is in recession right now, but it is very unpredictable and we have to be prepared for whatever is coming and that means those vaccination rates will have to rise.”

Maloney said that the region was also hard hit by the Ukraine crisis occasioned by Russia’s invasion of the Eastern European country since February “because we are net food and fuel importers, with perhaps the exception of Trinidad and Tobago, and so that puts additional strain on household budgets and government finances.

“So this has made it a very difficult couple of years for the Caribbean. The Bank has programmes I think for 19 countries in the region, focusing precisely on issues like fiscal sustainability, building resilience to natural hazards,” he said.

The chief economist said that in the case of Haiti, the French-speaking Caribbean Community (CARICOM) country is in a “very difficult situation”.

The World Bank official referred to what he termed “the Goldilocks” question in reference to several Caribbean countries tightening monetary policies with the private sector expressing concern over that measure.

“We have to be completely honest that the tools we have for combatting inflation are not fine instruments. Raising interest rates works on inflation precisely by reducing aggregate demands for product. So the art for this … is you are going to raise interest rates enough so that people could see that inflation is under control and that expectations aren’t rising …but not enough to drive the economy into a recession.”