By NEIL HARTNELL
Tribune Business Editor
Hurricane Dorian's "considerable hit to GDP" will likely cause the Bahamian economy to contract in 2019, a former finance minister saying: "We took a real beating squarely on the chin."
James Smith, who held the post during the 2002-2007 Christie administration, told Tribune Business that rising unemployment and the sharp drop-off in commercial activity in the storm's wake will inevitably have "a tremendous dampening effect" on this year's projected 1.8 percent gross domestic product (GDP) growth.
While foreign direct investment (FDI) levels have always rebounded in the aftermath of previous major hurricanes, Mr Smith said Dorian's ferocity and storm surges might force The Bahamas to "go back to the drawing board" when it came to construction design and location, the robustness of building materials, and where critical infrastructure was placed.
And, in the wake of the damage and oil spill at the South Riding Point terminal, the ex-Central Bank governor added that international assistance may be required to determine whether the storage tanks at that facility and BORCO were able to withstand the strongest hurricane winds.
Mr Smith said the sheer scale of Dorian's devastation on Abaco and Grand Bahama would almost inevitably wipe out any growth prospects for The Bahamas in 2019 and cause the economy to contract.
"It has to be negative," he told Tribune Business. "Without going into details, the entire labour force in those islands, the second and third largest islands in the country, won't be working for a very long time.
"Not to mention that from the revenue side businesses won't be selling anything to anybody. I think the combined population of Grand Bahama and Abaco is about 70,000. Our labour force that is working is about 210,000 to 215,000, so about 35,000 people will not be working for months or more, perhaps even longer."
"That's just on the business side," Mr Smith continued. "It's [Dorian] going to compress GDP considerably. You can't net it off against aid as it's not part of GDP. Insurance will not be coming for a long time.
"It's going to be a considerable hit to GDP - the size of the economic shock, and taking out a considerable part of the productive apparatus in Grand Bahama and Abaco. You have to add to that the cancellations in those areas among visitors who made arrangements to come between now and the end of the year, and next year.
"It's going to have a tremendous dampening impact on growth. We have to rebuild infrastructure to get back to some level of output. We took a real beating squarely on the chin this time."
Abaco's total labour force stood at 14,255 at year-end 2018, with some 13,155 of that number employed, while the numbers for Grand Bahama were 32,710 with 28,810 having jobs. With both islands, and Abaco in particular, depopulating in Dorian's wake and business/commercial activity virtually non-existent in the worst-hit areas, hundreds if not thousands are likely to become unemployed.
Mr Smith, meanwhile, queried whether Bahamas-based oil storage facilities are "up to standard" following the damage and spillage at South Riding Point that caused a near-environmental disaster.
"That's another area that has to be looked at very carefully," he told Tribune Business. "We probably need some international assistance to look at that entire area, as it could have long-term implications for that entire region."
The former finance minister said FDI, which The Bahamas relies on heavily to drive economic growth and job creation, had a history of bouncing back in the aftermath of major storms that dealt a serious blow to this country.
"What might need to happen at this stage is to seriously look at the type of structure built in The Bahamas and its ability to withstand 200 mile per hour winds," Mr Smith said. "It might mean different types of design and materials, circular buildings, buildings that are stronger and more environmentally friendly, and are built on stilts.
"I'm sure the technical people will be putting their heads together and go back to the drawing board on specific types of construction in The Bahamas."