Deputy Prime Minister Peter Turnquest.
By Youri Kemp
Tribune Business Reporter
The deputy prime minister yesterday warned The Bahamas faces a “very deep and stark recession”, and urged it to brace for “major problems” if the COVID-19 crisis continues beyond summer.
K Peter Turnquest, speaking ahead of yesterday’s Cabinet meeting, indicated the government’s initial estimate of a $1bn economic blow for the four months to end-June 2020 may now be an under-estimate given the near-total tourism industry shutdown.
That projection, which was based on the loss of all cruise ship passengers and 80 percent of stopover tourists, will likely need adjusting given that most of The Bahamas’ hotel industry has shutdown as a result of also losing 100 percent of the latter segment.
Mr Turnquest acknowledged that the likely economic loss, which was initially pegged at $832m in tourism spending and around $147m in combined government revenues/spending, will “unfortunately go higher” due to the severity of the resort industry’s closures/lay-offs.
“I think that is a very much a possibility,” he said, when asked if the Bahamian economy was likely to suffer a major contraction. “The fact is that we are probably in recession, and this is not just a gentle recession, but this looks like this is going to be a very deep and very stark recession.
“Hopefully we can get this virus under control before the July-August timeframe so that we have an opportunity to catch ourselves before the third quarter. I think if we run into the third quarter with things the way they are we are going to have some very significant problems not only locally, but globally.”
Mr Turnquest added: “Obviously these are going to be very difficult times for us. Our worst-case scenario up to this point has showed us up to a $1bn in losses to the economy. With the shut down now we certainly have to go back and re-evaluate, and I expect that it would go higher, unfortunately.
“I think this is going to be a long-term problem for us, certainly well into the New Year, but we will address whatever the challenges are in the new budget that will be passed in June.”
Voicing optimism that the government has enough fiscal “headroom” to carry The Bahamas through to the end of the 2019-2020 budget year, which ends on June 30, Mr Turnquest said: “Unless things dramatically change, and they can, we should be able to get to the next budget cycle where we will mop up and address whatever the longer term challenges may be.”
Revealing that the COVID-19 pandemic’s fall-out was “very stressful” for the Ministry of Finance, he added: “The challenges that Dorian brought did not go away as a result of this hurricane, nor did the threat for a new hurricane during this next season that is a couple of months away.
“So we have serious challenges ahead of us trying to mop up whatever restoration efforts need to be done to make sure structures are sound, and people have shelter for the upcoming season and, by the same token, finance that as well as address this shut down and what that means to the revenue loss as well as what it means to the businesses that are going to find it very challenging during this particular period and throughout the rest of the year.”