For most Caribbean countries, the COVID-19 pandemic will translate into the deepest single-year contraction of real Gross Domestic Product (GDP) on record in 2020 according to the latest Caribbean Quarterly Bulletin that is produced by the Inter-American Development Bank (IDB). The document notes that with the exception of Guyana, countries have experienced deep recessions, severe increases in unemployment, and long-lasting damage to many corporate and household balance sheets.
It said that the social consequences of the crisis continue to mount, and despite governments’ best efforts to buffer the shock to families, enterprises, and domestic markets, there remains a dire need for continued and more broad-based stimulus to ensure that economic capital—both human and otherwise—remains intact. While the recent rapid progress towards the development and distribution of a vaccine appears to be an increasingly bright light at the end of the tunnel, the financial institution said that Caribbean economies that depend on external demand from advanced economies are not likely to see a full return to normal for some time.
Moving forward, the IDB articulated that prospects for the tourism sector depend on global progress in controlling the coronavirus, effective distribution of the vaccine and the vaccination of populations in key source countries, and the ability of the Caribbean countries themselves to maintain health protocols and limit both imported cases and community transmission, as they have succeeded in doing recently.
For commodity exporters in the region, the report states that the global economic shock has produced an external shock in the form of lower commodity prices. It further noted that prices for oil and natural gas have stabilized since the extreme volatility experienced in the second quarter of the year, but oil prices remain about 20 percent below the average for 2019.
In addition, the IDB said that the virus itself has affected production levels for some essential commodity exports such as gold in Guyana and Suriname, though production appeared to be recovering in the latter part of the year.
