World Bank says growth outstripping forecast, but warns a 3rd COVID spike could derail recoveryFriday, July 23, 2021
BY DASHAN HENDRICKS
The pace of economic recovery in Jamaica and the rest of the Latin America and Caribbean (LAC) region is expected to be faster than originally anticipated. However, Carlos Felipe Jaramillo, the World Bank's regional vice-president for Latin America and the Caribbean, warns that a third spike in infections from the novel coronavirus could spell disaster, especially with the presence of a number of variants.
Jaramillo, in an interview with the Jamaica Observer at the end of a three-day visit to the island on Wednesday, pointing to revised forecast from the World Bank for the LAC region, said the expectation is that growth this year will reach 5.2 per cent. That is up from the 3.8 per cent growth that was projected for the regional economy when the original forecast was made in January. “What I can tell you with some certainty is that we started the year with fairly low growth projections for most of the region, thinking that the crisis will last longer and have a longer impact.”
He, however, said that “in the last three or four months” economic activity has been picking up as countries reopen after undergoing various levels of lockdown to contain the novel coronavirus pandemic. “In Jamaica and many other countries in the region, [we are seeing] a certain level of normalisation of economic activity. We see tourism gradually recovering, we see tax revenues [increasing], we see people getting back to work gradually. At the rate we are going, in the next three months, we may have to do yet another upward revision,” he added.
For Jamaica, he said that could mean faster growth than originally forecast as well. “In Jamaica, we are projecting above the average of the region, somewhere between 5 and 7 per cent, which is good.” The original forecast for Jamaica was for growth in the region of 3 per cent. Jaramillo, however, added that “all countries will need to continue growing because at this rate we won't get back to pre-pandemic income levels until about 2024.” But, the Bank of Jamaica has forecast that Jamaica's economy will return to pre-pandemic levels by 2023.
Jaramillo was, however, quick to point out to the Caribbean Business Report that uncertainties, chiefly the impact of COVID-19-induced lockdowns and the possibility of a third wave of coronavirus infections as countries reopen, still remain, which could derail the growth forecast. He called on regional governnments to boost vaccination programmes to prevent a slowdown. “Vaccines are protecting people and its very hard to have a fully sustained recovery until the majority of the population is vaccinated. It is very encouraging to see what Jamaica looks like in the next few weeks, there will be plentiful supply – it has taken awhile. Unfortunately, globally there's been a shortage, but it looks like it's now being resolved and that's good. It is critical that people can get out again and go to work and do their thing.”
Jamaica has already signalled that considerations are being made to revise COVID-19 protocols if infection rates start rising rapidly again. Prime Minister Andrew Holness told Jamaica's Parliament on Wednesday that the COVID-19 subcommittee of Cabinet will meet this weekend “to consider whether there may be a need to tighten some of the measures in advance of August”.
Still, for Jaramillo, the hope is that China and the United States will continue to pull the global economy forward. “The US is in the process of passing a very large stimulus package, meaning the US is stimulating its own economy and imports into the US. This will have a spillover effect into the region. It will also stimulate tourism. And, then, at the same time, China is recovering. It is a big buyer of agricultural goods, mining goods and other things and so global trade is picking up in a big way.
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