One senior economist is warning that economic recovery in Barbados and other Caribbean states will depend heavily on vaccination against the COVID-19 pandemic.
In addition, Ian Durant, Director of the Economics with the Caribbean Development Bank (CDB), said regional governments will need to take several urgent steps to become more competitive even as they continue to struggle with high debt.
He made the suggestion on Thursday during the CDB’s 51st annual meeting of Board of Governors, which is being held under the theme Reimagining the Caribbean in the Wake of the COVID-19 Pandemic.
Examining the impact of the pandemic on Caribbean countries and the pressing policies needed for recovery and building resilience to global shocks, Durant pointed out that the region’s recovery could be a long and difficult one for most economies.
“On average, the recovery in the region after the great recession was about four years. In other small states the recovery was nearly immediate. You have some countries that took ten years and some countries that never regained the level of gross domestic product that existed in 2008 after the great recession,” he pointed out.
“We are anticipating that the achievement of debt sustainability is going to be a slow process,” he added.
Following the advent of the COVID-19 pandemic last year, the Caribbean’s bread and butter tourism industry came to a halt, regional merchandise trade plummeted, and the region experienced an average of about 7.2 per cent decline in economic activity.
Debt rose way above the 60 per cent benchmark for several countries, there was also a steep rise in unemployment and a major digital divide was realized.
Durant said vaccination as well as several key measures will be critical to the region’s recovery in a relatively short time.
“Ultimately it is going to be very important that the population is vaccinated in order to achieve community immunity, and there are about 12 countries among borrowing member countries that have not reached the 30 per cent vaccination level in the population,” said the CDB official.
“That is going to be very important for the recovery. The expectation is that tourist arrivals will start to increase, but the extent to which countries can benefit from the restart of the tourism industry is really about vaccination,” he stressed.
In addition, he said countries will need to focus on priority areas in order to contain expenditure and make sure they pursue “optimality” with respect to their revenue systems if they are to achieve a sustainable debt to GDP ratio.
Durant said governments must make their economies more competitive by urgently effecting improvement in several areas including government-owned institutions and infrastructure.
“Making economies more competitive facilitates diverse export growth and that is the route to resilience and significant sustained growth,” he said.
“We are talking about improving public sector regulatory framework so that these frameworks are not just cumbersome on the private sector and affecting cost. We are talking about improving business regulatory framework, we are talking about improving public finance management systems as well, to make sure the public sector is focused on achieving maximum bang for buck and there are adequate oversight systems to generally improve outcome,” he explained.
“We are talking about improving implementation to make sure projects are implemented expeditiously. Importantly as well, we are talking about exploiting the regional integration movement, making sure that that integration movement is capitalized on by countries. A cross-cutting issue with respect to this is digital transformation,” he added.