If the falloff in tourism due to the coronavirus (COVID-19) pandemic persists into the last three quarters of this year, The Bahamas could see as much as a 26 percent decline in gross domestic product (GDP), an Inter-American Development Bank (IDB) paper has revealed.
The paper, entitled “COVID-19: Tourism-Based Shock Scenarios for Caribbean Countries”, highlighted the magnitude of implications the pandemic could have on tourism-reliant economies in the region by measuring shock scenarios, reflecting a range of possible impacts of the crisis on the output of six IDB regional member countries including The Bahamas, Barbados, Guyana, Jamaica and Trinidad and Tobago.
“Seasonal fluctuations in tourist arrivals to the region are significant — with increases of as much as 200 percent between high seasons (generally October to April) and the lower volume period. In this context, should the crisis remain acute past September 2020, we would expect the impacts to be considerably more severe,” Economic Advisor in the IDB’s Caribbean Department Henry Mooney said in the paper.
“At the extreme, a high-impact scenario of a 75 percent reduction in tourism arrivals over the last three quarters of the year could reduce GDP relative to the pre-crisis baseline expectation by between 11 percent and 26 percent in the case of The Bahamas; and by appreciable magnitudes also for Barbados and Jamaica.”
Given these scenarios, the IDB has suggested that governments like The Bahamas should strongly consider low-cost loans.
“What is clear is that the spread of the virus, its implications for global financial markets and measures being undertaken by governments around the world have grown more severe with every passing day,” the paper notes.
“In this context, governments are likely to face increased financing needs driven by both direct costs of crisis mitigation and from revenue implications of the economic shock; policymakers should work towards developing contingencies and identifying low-cost supplemental financing options over the near term, including those available from international financial institutions.
“A failure to do so could have adverse implications for longer term fiscal and debt sustainability and put at risk the hard-won gains achieved by many countries in the region over recent years.”