Dominica and the other 18 borrowing member countries of the Caribbean Development Bank (CDB) are projected to see growth in their gross domestic product (GDP) in 2021, according to the CDB.
That growth could be about 3.8% on average and though not set in stone, is a silver lining following a crippling 2020 in which each of these economies contracted by an average of 12.8% due to Covid-19, the CBD reported.
The bank said in a press statement to announce its recently released ‘Regional Report: 2020 Review and 2021 Outlook’ that while it projects this economic improvement, a cloud of uncertainty exists as the Covid-19 pandemic is still ongoing.
Dominica, Saint Lucia, Grenada, the Bahamas and other countries which are relatively dependent on tourism, suffered a hard hit with over 70% drops in overnight visitors in 2020. This spilled over into other sectors of their economies and they each registered double-digit declines in their gross domestic product in 2020, the CDB stated.
“While the bank does not expect a return to 2019 tourism levels this year, tourism-dependent borrowing member countries will experience some economic recovery, led by Anguilla, where GDP is expected to increase by 10.9%,” the CDB said. “This recovery is underpinned by a gradual return of tourists, which is expected in the fourth quarter of the year, and focused efforts to roll out mass vaccination programs throughout the region. However, recovery is subject to risks, such as new waves of infection and possible new variants of the virus, and widespread availability of vaccines for some countries.”
The bank noted that even when the pandemic subsides, existing economic challenges should continue to be tackled in order to maximize growth in the region. The CDB suggested that “accelerated programs to strengthen macro-fiscal frameworks and broad-based structural reforms” are necessary to curtail development constraints which limit productivity and growth.
Pointing to the steep declines in economic activity in 2020, which led to dips in government revenue and spikes in their expenditure to support health and social and economic stimulus, CDB President Dr. Wm Warren Smith underscored the importance of developing stronger economies in the region.
“The pandemic has underscored the importance of building economic and social resilience. We can only reduce the susceptibility to external shocks when we accelerate the diversification of our economies; broaden our productive base; and take appropriate measures to build competitiveness whilst providing adequate safety nets to protect our most vulnerable groups,” Dr. Smith said.
Primary fiscal balance had worsened in every borrowing member state in 2020, averaging -4.1% of GDP compared with -1.3% in 2019, the CDB said. There was increased unemployment in many countries with higher rates among women and young people.
According to the bank, in 2020, debt rose in every CDB borrowing member country except Guyana. The regional debt-to-GDP average moved from 66.5% to 79.5%. In Barbados debt reached almost 150% of GDP. While regional debt is projected to continue rising to 81.5% of GDP in 2021, debt-to-GDP ratios are expected to fall in seven countries, with the steepest decreases in Barbados by 8.3 points to 141.2% and in Jamaica by 6.7% to 97.4%, the CDB said.
The organization is reporting that it spent over $140.2 million in financing in 2020 and secured an additional $50 million for 2021 to support its member countries in mitigating the macroeconomic fallout and adverse social effects of the COVID-19 pandemic.
Last year, Dominica received US$2.5 million or just over EC$6.7 million out of an approved US$66.7 million from the bank as an emergency loan due to Covid-19 economic downturn.
The island was among seven regional territories to benefit from these loans. The others were Belize (US$15 million), Grenada (US$5.9 million), Saint Lucia (US$10.8 million), St. Vincent and the Grenadines (US$11.3 million), and Suriname (US$8.2 million).