Prominent economist Marla Dukharan has painted a picture of far worse declines in economic growth for 2020 than the International Monetary Fund (IMF) has predicted for Barbados and Caribbean economies.
In addition, she said the IMF’s forecast that global growth would rebound in 2021 would be based on “how long a recovery process takes – how long it takes to get a [COVID-19] vaccine and wider testing going”.
Adding that there were a lot of variables that were not yet known, Dukharan said chances are that the IMF targets would have to be revised again.
In its forecast just last week, the IMF said it was expecting the global economy to contract by three per cent this year, and then grow by 5.8 per cent in 2021, while describing the COVID-19 pandemic as “a crisis like no other” and the lockdown worse than the great depression.
The IMF is forecasting that the Barbados economy will shrink by 7.6 per cent this year. It is projecting that the only country in the region likely to show positive growth this year is Guyana, albeit revised downwards from about 80 per cent to about 52.8 per cent growth.
In her Caribbean Economic Outlook COVID-19 update for April, Dukharan said she expected oil prices to have an impact on Guyanese growth.
“Every other country in the region is going to contract this year,” she said.
However, Dukharan said she believed the IMF numbers, which have seven economies to contract by ten per cent or more, four economies to contract in the region of eight per cent and nine economies to contract between one per cent and 7.6 per cent, as “quite optimistic”.
She reasoned that if relatively stronger economies including Bermuda and the Cayman Islands were expecting declines of between 7.5 per cent and 12.5 per cent, and 15 per cent this year, respectively, “it suggests to me that some of the weaker economies in the Caribbean are all going to contract at higher numbers”.
“I would suggest that for most countries it is going to be a lot worse.”
Dukharan’s assessment comes as Central Bank of Barbados officials prepare to release their review card on the Barbados economy for the first three months of this year and outlook for the rest of 2020.
Dukharan told Barbados TODAY she did not expect any major fallout for the economy in the first quarter given the time the COVID-19 pandemic started to affect the world economy and Barbados’ bread and butter tourism industry.
She said: “I actually expect that the first quarter for Barbados wouldn’t have been too bad. Maybe some year on year growth with the first quarter of last year, but of course everything will start to hit in the second quarter, with respect to how much of a [contraction] I expect this year for Barbados.”
But she insisted that she would not be surprised if the IMF revised its 7.6 per cent decline for the year for Bridgetown and predicted a steeper contraction simply because of the dramatic fall-off in tourism that is not expected to recover for several months.
“I don’t expect any cruise tourism at all from Barbados for the rest of the year at least, and in terms of stopover tourism, I think right now all we have is the luxury market where people are flying in their private jets and staying in villas. I think that market is probably the only market where we will see any kind of activity for Barbados and other countries in the region,” she said.
She further explained that the earliest she would expect some substantial tourism activity would be around November or December “because commercial flights will take a while to be re-established and people’s anxiety about travelling even if it is opened up, will take a while to be resolved”.
She also pointed out that with warnings of a second wave of the COVID-19 pandemic in some countries, it was unlikely that people would travel in any hurry.
Dukharan predicted: “I really don’t think we are going to have meaningful tourism for the rest of this year. So I think we can probably think about maybe just like Bermuda said, 7.5 to 12.5 per cent contraction, Cayman says 15 per cent, Curacao and St Maarten 15, it wouldn’t surprise me if Barbados would end up in that kind of ballpark.” [email protected]