…debt rose in every CDB Borrowing Member Countries except Guyana
…projected GDP growth of 8.4% for Guyana in 2021
By Lisa Hamilton
The COVID-19 pandemic has undeniably hit the Caribbean region hard, however, the Caribbean Development Bank (CDB) review of Guyana’s economic performance for 2020 shows that Guyana is the only economy to record economic growth due to oil production and zero debt increase.
The CDB released its report on Thursday which provides a Regional economic review for 2020 and an outlook for 2021 for its 19 Borrowing Member Countries (BMCs).
According to the report: “Guyana was the only economy to record economic growth (26%), solely due to the start-up of its first oil production. However, growth was lower than expected due to lower global oil prices…Guyana also saw mixed performances in agriculture – sugar production fell while rice production rose.”
On the other hand, the majority of BMCs registered double-digit declines in GDP. Countries with significant tourism industries, such as The Bahamas, Barbados, Belize, Cayman Islands, Dominica, and Grenada, were hard-hit by a more than 70% drop in overnight visitors in 2020, which spilled over to affect other economic sectors.
An increase in agricultural production in Jamaica could not prevent the economy from shrinking by 10.4%. Agriculture in Belize was affected by severe drought from the previous year, and then a reduction in tourism-related demand. The economy contracted by 13.3%.
Caribbean countries, such as Trinidad and Tobago saw declining oil prices also causing an economic contraction of 11.1%. In Haiti the pandemic affected manufacturing supply chains which compounded the effect of social unrest on their economy. Altogether, CDB’s BMCs contracted by 12.8% on average due to the onset of COVID-19.
Meanwhile, amid it all, there were still more positives for Guyana. In 2020, debt rose in every BMC 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%.
According to the CBD, while a return to 2019 tourism levels this year is not expected, tourism-dependent BMCs will experience some economic recovery, led by Anguilla, where GDP is expected to increase by 10.9%.
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 programmes 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.
Close behind is Guyana which, due to expected oil price increases along with production expansion, should contribute to projected GDP growth of 8.4% in 2021. Higher oil prices will also support modest economic growth of 0.3% in Trinidad and Tobago.
CDB has projected an average GDP growth of 3.8% in 2021 for BMCs. However, this projection, made in Part 1 of CDB’s Regional Report: 2020 Review and 2021 Outlook, released today, is clouded by the ongoing uncertainty, caused by the global pandemic.
CDB President Dr. Wm Warren Smith has stated: “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.”
