The Barbados economy is expected to be hit by more than $50 million in losses during the two-week COVID-19 lockdown which ends next Wednesday.
In giving an overview of the economic impact of the lockdown last year and the potential fallout from the current shutdown during an interview with Barbados TODAY, Minister in the Ministry of Finance Ryan Straughn said his forecast is based on the average spend per week across the economy, which he hopes does not decline any further.
However, Straughn expressed some fears that the economic impact could turn out to be even worse when one considers that unlike in the earlier lockdown, supermarkets are closed on weekends and public markets are also out of business during the national pause.
“On the basis of everything that has gone on to date, from an estimated perspective, then the aggregate loss is just over $50 million for the two weeks. However, I say that guardedly because obviously, we have closed the market which we didn’t do originally last time. We have also had a situation where the supermarkets are now closed on Saturdays and Sundays for the two weeks…and therefore I am saying within all of that, just over $50 million would be the expected loss,” the minister responsible for finance said.
He added that this is assuming the average spend drops from $167 million per week to $141 million.
“We certainly hope that it doesn’t get any lower in terms of the average spending per week; then we want to be able to start to rebuild and have the economy recover certainly as quickly as possible,” the minister declared.
He said it is estimated that the Barbados economy lost just under $1.5 billion in 2020 which he linked to the shutdown in tourism business with its obvious effect on the economy.
“Basically what that means is that during 2019, the average weekly spend was about $200 million. That reduction means that during 2020, the average weekly spend was just over $170 million. Now when we look a little closer at the data…during the first quarter of last year, we still enjoyed a relatively good tourism season…and the average weekly spend in the first quarter of 2020 was $213 million which was actually higher than the first quarter of 2019,” he pointed out.
“But obviously during the lockdown, which came in the second quarter…which as you well know, we had a protracted re-opening where we had to put the protocols in place for businesses to re-start. The average estimated spending during the second quarter fell to $141 million per week…and that clearly was a reflection of where we were then in terms of the stoppage of travel and obviously, it meant that there was a significant contraction in the economy,” Straughn explained.
“During the third quarter and fourth quarter of 2020, there was some recovery, but obviously not to the level that we would anticipate where people would go back fully to work and therefore we ended the year with average spending of about $167 million every week in the economy.
“If we assume that January continued with that same trajectory of $167 million per week being spent in the economy, given that the profile for December and January was not significantly different, then when we look back to the second quarter, we would hope that on the basis of everything that has gone on to date, that from an estimated perspective, then the aggregate loss is probably just over $50 million for the two weeks,” the minister explained.
But Straughn told Barbados TODAY that even though the local economy has started at a much lower level in 2021 than it did last year and at any given point in recent history, there is light at the end of the proverbial tunnel between the latter part of this year and into 2022.
“Let me say that 2021 was always intended to be potentially be a better year if not only because [there’s] different management internationally…and certainly with the change in the administration in the United States, we have already started to see changes with respect to policy, with regards to management of the pandemic. We anticipate that that leadership which was absent globally, that that would translate into better coordination internationally and therefore allow 2021 into 2022 to be a much better experience for the global economy,” the minister stated.
Straughn issued a plea to Barbadians to comply with the health protocols so that whatever economic activity the country could muster would help to keep it afloat through to the end of this year.
“And that is the purpose of the two-week lockdown to bring the numbers [of COVID cases] down and to emphasize to Barbadians that we have to focus on how best to manage the protocols on a day-to-day basis, not just at work, not just when we visit business places, but when we engage in leisure whether at our homes or out in the community,” he declared.
On Tuesday, Chairman of the Barbados Private Sector Association (BPSA) Edward Clarke indicated that he feared the worse for the business community if Government were to extend the existing lockdown.
For Clarke, an extension would only get his support in “extreme circumstances”.
At the same time, he too pleaded with residents to adhere to the COVID-19 protocols to prevent further unemployment and economic ruin.