A new report by the Inter-American Development Bank (IDB) is urging Guyana and other Caribbean countries to invest in infrastructure as a means of securing economic growth once COVID-19 subsides.
The advice comes in the face of rising COVID-19 cases across the world.
Caribbean economies are being told that it will need more aggressive fiscal actions to protect their productive assets and invest in ways that ensure more sustainable growth in the future.
The report acknowledges that fiscal space is a constraint but noted that as a nascent economic recovery emerges, additional resources should be channelled to high-productivity infrastructure products to further stimulate growth.
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.
The report says Caribbean economies face a challenging peak tourist season with double-digit contractions, plus commodity shocks on non-tourist 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.
The report expresses the belief that once the investment is made in infrastructure, over time, this drives higher levels of private investment, incomes, and consumption.
“Caribbean countries are particularly well placed to benefit from increased or accelerated public investment, in part because of the region’s significant needs. In this context, the past decade has seen declines in public investment levels across Caribbean economies,” the report notes.
Beginning in 2014, and coinciding with large declines in global commodity prices, levels of public investment in commodity exporters Guyana, Suriname, and Trinidad and Tobago saw single year contractions of over -40 per cent, -50 per cent, and -75 per cent, respectively.
Regional country economist for the Caribbean at the IDB, David Rosenblatt believes that the first task for regional countries is to stop the coronavirus from spreading.
“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.”