Economic policies for Jamaica to combat the pandemic — Part 2Sunday, September 19, 2021
BY KEITH COLLISTER
Several weeks ago, CVM was kind enough to invite me to speak on the topic of 'Economic policies to combat the pandemic', some of which points I outlined two weeks ago on Sunday.
At the time, I argued that we now had a weaker than expected global economy (now confirmed by many other commentators), particularly in the US, and that the rise of the Delta variant also made the immediate outlook for the local economy much weaker. My conclusion, like a number of other local economic commentators, was that it would therefore be a wrong move for the Bank of Jamaica to raise interest rates at this time, so we should find out shortly if they agree.
I also noted that the total lockdown (albeit for a few days a week) was not sustainable and needed to be replaced with a risk-management approach. It made no sense to arbitrarily create large crowds at supermarkets or fast-food enterprises with overly restrictive closing times as people rush to get what they need. I am therefore happy to see that the current lockdown ends tomorrow.
In the CVM piece, I also commented on the recent suggestion to restrict tourism to only vaccinated visitors, with the idea that we would see a positive shift in demand offsetting the potential loss. This idea makes no sense to anyone who is knowledgeable about the industry. In our key source market, the United States, which has literally kept the industry open at over 98% of our travellers for most the COVID-19 period (maybe 96% now), nearly half of the population remains unvaccinated.
So it may be possible for a few very small high-end tourism countries in the Caribbean, often already vaccinated due to their low populations and some of whom benefit from preferential access to vaccines from their “mother” countries. Typically, these countries also benefit from substantial financial support depending on their links to their metropoles. Some such countries may be able to benefit from a slight shift in demand outweighing the overall loss of other business due to their low overall tourism numbers. However, I noted in the CVM interview that I had seen numbers for one such island, which has already run the experiment. This island benefited from all the key factors suggested as important to enable this outcome (high vaccination, “mother” country financial support, relatively small tourism numbers so possibility benefiting from a demand shift, high-end tourists, etc). They saw an immediate sharp contraction in their tourism numbers, as expected.
In the case of Jamaica, which does not have these advantages and is a mass tourism destination, the result is a foregone conclusion. Our key competitors are Mexico, the Dominican Republic and The Bahamas, all of which have no such requirement and indeed have taken a much more liberal approach than Jamaica, and have seen a sharp tourism recovery as a result, with the Dominican Republic approaching 2019 levels of visitors.
This is not to suggest we should adopt their approach, but just that we should not pretend that something we would like to be true will be true. In addition, a quick look at the tourism corridor statistics reveals that for almost the entire COVID-19 period, cases were only around 0.6% of people tested, suggested the combination of testing and strong protocols actually worked very well. This is actually unsurprising as it is no different from a well-managed office, but better in that visitors will be mostly in the open air (for leisure and dining) with masks worn. The problem emerges when visitors visit family members in the community, particularly mass events such as weddings and funerals, or non-regulated mass entertainment activities with no masks. Again, this is to be expected.
The impact of the Delta wave has recently doubled the corridor infection rate, due to its much greater infectiousness, but this will need to be adapted to as it is a phenomenon occurring right through the region and indeed worldwide, even in heretofore so-called “zero COVID” countries. The best solution is to look again at a social partnership approach, as recently suggested by Professor Alvin Wint, where the different sectors work together to get the job done. For example, it is encouraging, albeit late, that the private health-care sector is finally being mobilised for the distribution of vaccines. Unlike, say, the UK (and other European countries) Jamaica does not have a National Health Service, and therefore would always have needed to go “private” to reach the number of people required. The wider distribution of masks could also be a key area of focus.
Finally, in the context of a discussion on social partnership, it would be good to restart a conversation on the best tax measures and ways to provide relief, both individual and corporate, as it looks like we are at best halfway through this crisis. As I mentioned in my CVM presentation, reducing taxes on shipping charges at the port, due to its arbitrary impact, may not be the best solution for higher prices. Nevertheless, we need to look carefully at our current approach to taxation and expenditure to see what might work.
More on this next week.