In the face of rising COVID-19 cases, the Inter-American Development Bank (IDB) is cautioning that Caribbean economies will need more aggressive fiscal actions to protect their productive assets and invest in ways that ensure more sustainable growth in the future.
This was noted and expounded on in its latest report – “A Pandemic Surge and Evolving Policy Responses” – which is part of the Quarterly Bulletin Series put together by the economics team of its Caribbean Department. It includes detailed analysis for Guyana, Jamaica, Barbados, The Bahamas, Suriname and Trinidad and Tobago. It comes at a time when COVID-19 cases are rising worldwide and in most Caribbean countries, negatively impacting the tourism industry just as it enters its peak season.
“First and foremost, countries need to stop the coronavirus from spreading,” said David Rosenblatt, regional country economist for the Caribbean at the IDB, noting that the number of virus cases was rising everywhere with the exception of Barbados. He added,
“Countries will need to use sophisticated tools that look at closure or reopening of their economies with decisions based on susceptible, infected and recovered models, both at source and destination countries.”
Looking ahead, the report notes that Caribbean economies face a challenging peak tourist season with double digit contractions, plus commodity shocks on the non-tourist economies of Trinidad and Tobago and Guyana, though Suriname and Guyana will see a boost from high prices for gold. It said too that early tourism booking data suggest sharp declines for Jamaica, The Bahamas and Barbados.
Taking this into account, Henry Mooney, the Research Economics Advisor for the Caribbean department of the IDB said that a well-designed public investment programme can help stimulate a lasting economic recovery, while noting that several governments are already considering the options.
The official said, “Fiscal space will remain an important constraint, but as a nascent economic recovery emerges, additional resources could be channeled to productivity-boosting infrastructure projects to further stimulate near term growth, and long-term development.”
In this regard, the Advisor said better roads or airports facilitate the transportation of goods and services to the market while adding that improved water and power infrastructure enable industries to operate at lower costs and improves an economy’s productive capacity.
Over time this drives, Mooney said that this drives higher levels of private investment, incomes, and consumption.