IDB urges Caribbean countries to invest in infrastructure to secure post-COVID growthFriday, November 20, 2020
In the face of rising COVID-19 cases, Caribbean economies will need more aggressive fiscal actions to protect their productive assets and invest in ways that ensure more sustainable growth in the future, according to a new report by the Inter-American Development Bank (IDB).
Referring to the constrained fiscal space and a budding economic recovery, the study noted that additional resources should be channelled to high-productivity infrastructure products to further stimulate growth and long-term development.
It added that better roads or airports facilitate the transport of goods and services to market, and improved water and power infrastructure would enable industries to operate at lower costs and improves an economy's productive capacity.
“Over time this drives higher levels of private investment, incomes, and consumption. Importantly, both economic theory and empirical evidence suggest that countries with relatively less public capital, or where the stock of capital is in need of improvement, stand to benefit most,” the report stated.
The report — 'A Pandemic Surge and Evolving Policy Responses' — is part of the Quarterly Bulletin Series put together by the economics team of the Caribbean Department of the IDB. It includes detailed analysis for Guyana, Jamaica, Barbados, The Bahamas, Suriname, and Trinidad and Tobago. It comes at a time when COVID-19 cases are rising worldwide and in most Caribbean countries, negatively impacting the tourism industry just as it enters its peak season.
“First and foremost, countries need to stop the coronavirus from spreading,” said David Rosenblatt, regional country economist for the Caribbean at the IDB, noting that the number of virus cases was rising everywhere with the exception of Barbados.
“Countries will need to use sophisticated tools that look at closure or reopening of their economies with decisions based on susceptible, infected and recovered models, both at source and destination countries,” he continued.
According to IDB, looking ahead, Caribbean economies face a challenging peak tourist season with double-digit contractions, plus commodity shocks on non-tourism economies of Trinidad and Tobago and Guyana — though Suriname and Guyana will see a boost from high prices for gold. Early tourism booking data suggest sharp declines for Jamaica, The Bahamas and Barbados.
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