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REGIONS AMERICAS


Covid-19 pushes the Caribbean to diversify


THE FALLOUT FROM THE PANDEMIC HAS FORCED A RETHINK IN THE ISLAND ECONOMIES. SETH O’FARRELL REPORTS


C


aribbean countrieshave grown used to weathering the storms that batter their golden shores


every year between June and November. But the economic storm theworld faces withCovid-19 is some- thing new entirely. “Covid-19 has laid bare pre-exist-


ing vulnerabilities and forced us to recognise the importance of pressing


that reset button on our development agenda,” Deodat Maharaj says, speaking from his house in Bridgetown, Barbados. A Trinidadian national and former deputy


secretary general to the Commonwealth for economic and social development, Mr Maharaj was appointed executive director of the Caribbean Export Development Agency in January 2021 to lead a “transformational agenda for Caribbean resilience”. Between January and August 2020, tourist


numbers to the Caribbean fell by 64%, accord- ing to theUNWorld Tourism Organization. With all but three countries in the region


classified as tourism-dependent by the International Monetary Fund (IMF), Covid-19 has revealed just how exposed one of the most highly indebted regions in the world is to unforeseen shocks. Across the Caribbean, national governments are looking to pivotaway from tourism and diversify their economies. However, questions remain over the long-term effects of the pandemic’s damage to these gov- ernments, their limited fiscal space and capaci- ties to embrace newsectors.


Looking for options “Countries across the region are looking for options and job creation: some with special


economic zones (SEZs), some will focus on new entrepreneurship, others on blue- and eco- tourism. Because if you remain withtourismor one main economic activity, it will be at your peril,” Mr Maharaj remarks. “The world is really hyper competitive.” To stay afloat, Mr Maharaj adds that the


region has to “re-imagine tourism because every single jurisdiction in the Caribbean can- not be selling sea, sun and sand”, advocating instead for selling culture. “In Trinidad, you link tourism with your carnival, Jamaica with art and music, Guyana and ecotourism, and so on,” he says. Krishna Srinivasan, deputy director of the


IMFWesternHemisphere Department, says that the real concern for the Caribbean economies exposed to the tourism fallout is “scarring”. “In the Caribbean, where tourism is the


mainstay, all other sectors are interlinked, whether it is the construction, retail, transport or financial sector, all these other sectors are also negatively affected,” he says, making it very difficult for small and medium-sized enter- prises to bounce back. What the IMF advocates, therefore, is for


“horizontal integration” in these economies, whereby tourism is paired with other sectors, such as shipping, agriculture and health, to give rise to the likes of ecotourism, medical tourism and agritourism.


FromVIP tourism toSEZservices In November 2020, Barbados’s prime minister, Mia Amor Mottley, signalled plans to fund a green investment plan that would allow tour- ism firms in the country to switchto renewable energy, making their supply chains more digi- tal and sustainable.


REGIONALECONOMICOUTLOOKFORLATINAMERICAANDTHECARIBBEAN REAL GROSS DOMESTIC PRODUCT GROWTH AS A PERCENTAGE


REGION Latin America and the Caribbean


Caribbean – tourism-dependent* – commodity exporters** South America***


Central America, Panama and Dominican Republic


2019 0.2


0.2 0.2


-0.1 3.2


2020 -7.0


-10.1 4.7


-6.6 -7.2


2021 4.6


1.4 6.0 4.4 5.6


2022 3.1


5.1


19.2 2.8 4.1


Source: International Monetary Fund *Tourism-dependent includes Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize,


Dominica, Grenada, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines ** Commodity exporters includes Guyana, Suriname and Trinidad and Tobago ***South America excludes Guyana and Suriname


56 www.fDiIntelligence.com June/July 2021


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