In a best case scenario, The Bahamas could recover 50 percent of lost tourism inputs by the third quarter of 2020, the Inter-American Development Bank (IDB) is projecting in a just-released report on the regional financial implications of the coronavirus (COVID-19) pandemic.
On the other hand, should the crisis remain acute past September 2020, the effects are expected to be considerably more severe.
The report simulated three scenarios resulting from COVID-19 on the top tourism-reliant economies in the region – Barbados, Jamaica and The Bahamas – showing the impact of a reduction of tourism activity by 25, 50 and 75 percent over three time horizons beginning on April 1 and ending on June 2020, September 2020, and December 2020 respectively.
For The Bahamas, a rapid recovery before September could result in only a loss of 3.5 percentage points of tourism input relative to the pre-crisis baseline estimates for 2020.
“In addition to the various scenarios with fixed durations and magnitudes presented earlier, we have also simulated two alternative recovery paths representing possible trajectories for tourism flows to the region: a rapid recovery and a delayed recovery. The rapid recovery scenario envisions a 75 percent reduction of tourism flows relative to 2019 during the second quarter of 2020, followed by a recovery to 50 percent in Q3 and a return to 100 percent of the level observed in 2019 for Q4,” the report notes.
“A delayed recovery scenario envisions a full cessation of tourism across all Caribbean countries during Q2, followed by a 75 percent reduction during Q3 and a 50 percent reduction during Q4. Though all caveats mentioned above remain applicable, these scenarios underscore that a crisis whose apex is reached earlier in the year— that is, before the beginning of the peak season in the fourth quarter — could be considerably less damaging than one that remains acute through the end of the year.”
The IADB noted however, that projecting actual economic growth rates for the rest of 2020 is almost impossible and the simulations only provide information on just how bad the situation could get.
“At this writing, the tourism sector in Caribbean countries is almost completely shut down. The analysis presented previously suggested that a sustained six-month disruption of tourism, on the order of a 75 percent decline in tourism receipts, would lead to double-digit declines in economic growth for The Bahamas, Barbados and Jamaica,” the report states.
The IDB has previously projected that The Bahamas could lose up to 26 percent of gross domestic product if the economic slowdown connected to the pandemic persists to the end of 2020.