The International Monetary Fund (IMF) says a sudden stop in tourism caused by border closures and lockdowns aimed at containing the coronavirus pandemic will cause a 6.2 percent contraction of the Caribbean economy in 2020.
This is the deepest recession in over half a century.
In a blog posted on its website yesterday, the IMF warned that lost output from firms and the high costs associated with managing local outbreaks could worsen the pandemic's financial impact in the Caribbean, while the upcoming hurricane season posed additional risks.
It said the region has seen massive cancellations of hotel bookings and temporary resort closures, fueling unemployment, and the experience from previous crises suggested that the recovery could be delayed.
The IMF said a steep drop in commodity prices had lowered exports and fiscal revenues in commodity export countries such as Guyana, Suriname, and Trinidad and Tobago, while energy companies could scale back production plans in anticipation of weaker demand as global manufacturing activity contracts.
It added that remittances were expected to fall sharply since the United States, Britain and Canada were also in deep recession.
Remittances average about 7 percent of the region's economic output, but exceed 15 percent of gross domestic product in Jamaica and Haiti.
Meanwhile, the head of the Federal Reserve yesterday dashed lingering hopes for a fast rebound from the coronavirus pandemic, saying the U.S. economy could feel the weight of consumer fear and social distancing for a year or more in a prolonged climb from a deepening hole.
After a two-day policy meeting, Fed Chair Jerome Powell offered no optimistic words about how fast the country might return - if ever - to the near-record low unemployment and solid growth of just a few weeks ago.
In a matter of weeks the U.S. economy has gone from historically low unemployment to seeing more than 26 million people file for unemployment benefits and the sharpest plunge in activity since the 2007-2009 Great Recession, as authorities across the country shut down large swaths of industry and commerce to slow the spread of the coronavirus.
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