As Barbados tries to reboot its economy in the COVID-19 pandemic, the Inter-American Development Bank (IDB) has warned of increased poverty and pointed to a doubling of inflation since the crisis gripped the country.
With joblessness hovering at an unprecedented 40 per cent, the tourism and hospitality industry still crippled from major disruptions to international travel and fears about the spread of the infectious disease, a new IDB report on Barbados predicted COVID-19 will result in a rising number of poor people.
“Despite high social indicators, poverty will likely increase as a result of COVID-19,” the study said. “Barbados ranks 56th out of 189 countries in the Human Development Index (with a score of 0.813), above other countries in the region such as Jamaica (96th) or The Bahamas (60th).
“Yet despite a reduction in inequality prior to COVID-19, poverty had increased in recent years.”
In the report, Latin America and The Caribbean Post-COVID: Challenges and Opportunities, the IDB examined the situations in Barbados, The Bahamas, Guyana, Suriname, Jamaica and Trinidad & Tobago.
IDB economist Laura Giles-Alvarez said: “Barbados seems to be effectively flattening the curve. Since registering the first cases of COVID-19 in the second half of March 2020”. She noted the country had taken a phased approach to reopening.
She noted that the economy’s three per cent decline in the first quarter of 2020 reflected the sudden drop in tourism arrivals and a slowdown of key sectors of the economy, such as wholesale and retail or financial services, due to the shutdown.
Giles-Alvarez said: “One of the most dramatic economic consequences of COVID-19 in Barbados is the rise of unemployment.
“Unemployment claims are likely to remain high until the tourism sector resumes its activity. Inflation has also continued an upward trend, which commenced in the second half of 2019 with the rise of food and transport prices. Inflation reached 5.2 per cent at the end of March 2020, compared to 2.5 per cent registered for the same period in 2019.
“Barbados’ private sector already faced constraints prior to COVID-19. Two of Barbados’ key structural constraints to private sector development are a weak business climate and barriers to access finance.
“Barbados’ competitiveness, like that of many small island states, is constrained by its market size. It reduces competition, lowering aggregate productivity and contributing to a weak business environment.”
Among the bank’s several recommendations include a need to continue monitoring spending, measure the efficiency of spending and streamline social programmes.
It also called for the continuous publication of data on socioeconomic indicators and social programmes, health and safety standards for the tourism industry, and help for the region to maintain supply chains.
In its regional overview, the IDB noted that recovery attempts post-COVID will be challenging.
It said: “For these small, open economies, the path for recovery depends on external developments. The recovery of the tourism sector will depend upon international cooperation on travel rules and sanitary protocols, and it will depend upon economic conditions in source countries — particularly, the United States and Europe.
“The recovery will also depend upon the success of the crisis response and domestic transition policies. The recovery will be built on the efforts of households, businesses and governments.”
According to the report: “Governments across the globe have been improvising, experimenting and struggling to implement their responses to the novel coronavirus crisis. The six countries discussed here are no exception.
“Moving forward to the transition and recovery phases, these countries will still be impacted strongly by the evolution of the global transition and recovery. There will continue to be uncertainty about the characteristics of the virus itself, including the strength and duration of the immunity enjoyed by recovered patients.
“Beefing up the capacity for testing, contact tracing and treatment is still needed, even as curves may be (at least temporarily) flattening in most of these countries.”