COVID-19: the Bahamian economy in freefall

We begin the second week of September with advice that the minister of tourism will deliver a report to the country at noon today.

We had expected the major economic policy speech the prime minister promised to deliver last month.

The Bahamian economy is in freefall.

There is no magic bullet that will restore our pre-pandemic economy in the near term.

We have yet to achieve adequate levels of testing for COVID-19; that hampers efforts by health authorities to identify and isolate those infected so as to contain and reduce the spread of infections.

Closing most segments of the economy for months on end, mishandling regulation of businesses permitted to operate and mistakes made in not enforcing sensible agreed protocols for visitors and returning Bahamians and residents at the reopening of international borders on July 1 have compounded our economic woes and fueled the spread of the virus.

Unemployment and NIB benefits, government emergency assistance and public and private sector food assistance programs barely reach far too many in critical need of assistance.

In June, the Department of Labour speculated that unemployment levels could rise to over 40 percent.

The Inter-American Development Bank’s (IDB) report on an online survey on the socioeconomic impact of COVID-19 on the economies of Caribbean member states, indicates that some 80 percent of low-income Bahamians lost employment since March while as many as 50 percent of middle-income individuals were also left jobless.

Using data collected in April 2020, the IDB reported that some 52 percent of Bahamian households declared at least one job loss, though of these 75 percent believed that they would be reengaged after the crisis

Tourism, the breadbasket of The Bahamas’ economy, has been on hold since mid-March as health requirements and emergency restrictions emptied hotels, stopped airplanes bringing sun and sand seekers to our airports, prohibited cruise ships calling at Bahamian ports and curtailed the arrival of private aircraft and yachts.

As a result, all the major hotel properties on New Providence and Grand Bahama immediately furloughed thousands of employees. Many have since had their employment terminated. Gradually, even small hotel properties that operated in the first months of the pandemic also reduced staff or closed completely.

Jobs disappeared in many tourism-related businesses that employ thousands more: taxi services, land and sea tours and excursions, wholesale and retail of souvenirs including straw work and wood carvings, restaurants, bars and entertainment establishments.

Bahamians now have less disposable cash and have reduced expenditures on everything except vital necessities: shelter, food, medicine. This, too, affected businesses – hardware stores, clothing, shoe and sporting retail shops and neighborhood shops, restaurants and bars that typically cater to daily needs.

Reduced business reduced the need for pre-pandemic levels of employment. Some suffered reduced workweeks with commensurate reduced incomes. Others lost employment altogether.

The international financial services sector and the public service have become the mainstay of the economy as the only sectors not to have reduced either staff or salaries, though some servicing financial services, including legal services, have not fared well.

Trials of serious matters have been suspended, as have hearings of civil matters. At least half of the public service has been shuttered for six months.

While not shuttered, real estate sales of high-end vacation homes to international clientele has reduced and the domestic real estate market has become more challenging.

We look forward to the report of the Economic Recovery Committee which promised to make recommendations for manufacturing and trade, for Family Island development and to support innovation in the green, blue, orange and digital sectors.

Most importantly, we look to the prime minister’s promised major economic speech.

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