The Inter-American Development Bank (IDB) is projecting that the COVID-19 shock will have significant implications for Jamaica's economic performance in 2020 and beyond.
Prior to the crisis, real GDP growth for Financial Year 2020/2021 was projected to be about 1.1%, set against the backdrop of expected strong domestic conditions and buoyant external demand for tourism and commodities such as bauxite.
However, the IDB in its quarterly bulletin, said the nature of the unfolding COVID-19 crisis is such that it is likely to affect a number of key sectors of Jamaica's economy.
The IDB says given the weight of the tourism sector, simulations suggest that a prolonged crisis could reduce output relative to pre-crisis expectations by an appreciable magnitude.
The IDB also says Jamaica's economy is likely to be adversely affected by shocks to trade and financial flows, as well as the costs associated with mitigation efforts at home such as forced closures of businesses.
It says revenue implications of shuttered businesses and sectors, as well as costs associated with mitigation efforts, will also have adverse implications for budgetary outcomes, forcing the government to run higher deficits than originally expected.