With international economic research company Moody’s Analytics advising that recession risks are on the rise amid the global economic slowdown due to coronavirus (COVID-19), former Governor of the Central Bank of The Bahamas James Smith said the present economic climate presents a unique challenge for The Bahamas since it is still recovering from the last recession.
“It could be very difficult to gauge the impact given that the country has not emerged fully from the earlier recession, given the unemployment levels,” he told Guardian Business.
“I think you’ve got to solve a more immediate problem, which has to do with stimulating our growth, whether or not this crisis impacts us.”
This, coupled with the country still in recovery mode from Hurricane Dorian, could present a long-lived challenge, the former minister of state for finance said.
“Yes, for quite some time to come based on the fact that you didn’t get over the first one and now you add some additional headwinds, it becomes even more difficult to move forward,” he said.
Moody’s has said the global spread of COVID-19 is resulting in shocks that will likely slow economic activity significantly, particularly in the first half of this year.
Global markets rallied briefly yesterday before taking another downward turn, making for increasing investor volatility.
Asked how closely Bahamians should watch the markets and if they are indicative of what’s on the horizon for the global economy, Smith said, “No. Very few Americans much less Bahamians are invested at that level in the market.
“That’s not a good measurement of what’s happening. The volatility has a lot to do with the lack of confidence. The real impact would be on the interruptions in the supply chain and if there are shortages.”
The Central Bank warned earlier this week that The Bahamas should expect some negative economic fallout as a result of the coronavirus and that until uncertainty subsides, Bahamian families should exercise prudence in their personal financial affairs and keep a tight control on discretionary spending.