The Tribune

By YOURI KEMP

and NEIL HARTNELL

Tribune Business Reporters

The Bahamas will never recover $9.5bn in economic losses and damage caused by COVID-19, it was revealed yesterday, with the pandemic combining with Hurricane Dorian to deliver a shattering $13.1bn blow to this nation.

Daniela Carrera Marquis, the Inter-American Development Bank’s (IDB) Bahamas country representative, said the global health crisis had caused “more than twice” the $3.5bn economic losses and costs inflicted by the Category Five storm as she described this nation as “one of the most disaster prone countries in the world”. The level of impact was 2.7 times’ that of Dorian.

Speaking as the IDB unveiled a study on COVID’s Bahamas impact, produced in conjunction with the United Nations (UN) Economic Commission for Latin America and the Caribbean (ECLAC), she added that this nation will continue to suffer repercussions from the pandemic through to year-end 2023.

With the potential for COVID to cause even greater costs than the projected $9.5bn if new infection waves emerge that are more contagious and deadly, the IDB/ECLAC study found that more than 83 percent - or $7.9bn - of The Bahamas’ total pandemic-related damages stem from tourism losses due to the lockdowns, border closures and other restrictions implemented in 2020 and 2021.

Ms Carrera-Marquis said: “According to the report, COVID-19 losses in The Bahamas were especially devastating in the initial stages of the pandemic. Eighty-four percent of the losses were concentrated between 2020 and 2021, and 48 percent of the losses in 2020 alone. 

“The report reveals that reveals that the estimated impact on employment for the period [through to] 2023 will be around 30,000 jobs, which is equivalent to 14.7 percent of the labor force of the Bahamas. This is consistent with a spike in the unemployment rate of 25.6 percent seen in initial stages of the pandemic.” Total wage losses suffered by Bahamian workers over the four years through to 2023 have been pegged at $2.4bn, a sum equal to an average 4.9 percent of GDP.

The Bahamian private sector, meaning businesses and their employees, bore a disproportionate burden from COVID’s impact by incurring 93 percent of the losses and damage. Tourism, which the IDB/ECLAC study said also includes bars, restaurants, entertainment, transportation and shopping, as well as hotels, suffered 91 percent of the losses inflicted upon what were described as the economy’s “productive sectors”.

Of the $7.9bn in total tourism industry losses, the vast majority - some $6.4bn or 81 percent - relates to the loss of higher-yielding stopover visitors who were otherwise projected to visit The Bahamas between 2020-2023. The remaining balance comprises $1bn lost as a result of the cruise industry’s 15-month sailing halt and $373m foregone in lost earnings from visiting boaters, yachters and other excursions.

On a monthly basis, tourism losses peaked at over $450m in the early months of the pandemic between April and July 2020. Despite spiking again to $400m in March 2021, these losses are projected to steadily decline over the remainder of 2022 and into 2023, although they will not be eliminated prior to the latter year’s end.

“In broad terms, the economy is expected to return to its pre-pandemic level only by 2024, mainly because of the gradual pace of recovery in the tourism sector and the long-lasting effects of COVID-19 in this sector,” the IDB/ECLAC study said.

The tourism industry’s COVID losses, which were pegged at $3.637bn in 2020 and $2.91bn in 2021, are projected to drop to $1.241bn in 2022. However, a further if relatively modest cost of $88.9m is forecast for 2023. Total economic losses and damage from COVID in that year are projected to be $117.6m.

Looking beyond tourism, the IDB/ECLAC study said: “The commerce sector got severely impacted due to the COVID-19 pandemic. The total losses in commercial sales to residents due to the COVID-19 pandemic are $823m. A portion of this is related to the fact that residents’ spending got impacted first due to the curfews and lockdowns, and then due to a decline in household income.

“Another part of this is directly related to tourism, which experienced a great decline during the first year of the pandemic..... Due to the Government restrictions related to the COVID-19 pandemic, the transportation system suffered a dramatic demand decrease in 2020, especially in the airport traffic and the recreational marine flow (cruises and general pleasure vessels).

“This situation generated a decrease in the usage of airports and marine piers, according to the restrictions implemented by The Bahamas’ government. For this sector, the estimated losses are approximately $595m for the whole country, which are mainly caused by the decrease in tariff payments by air and marine passengers at airports and navy piers (92 percent). The rest is related to the fall in the collection of aircraft landing fees, cruises fees cargo vessels fees.”

Fisheries suffered minimal impact, according to the IDB/ECLAC report, which said: “Fisheries is an important activity for The Bahamas, both economically and culturally. The impact of the COVID-19 pandemic in the sector was reduced and circumscribed to some staples. The main fishing staple (spiny lobster) was unaffected. The estimated losses are $1.86m, mostly in snapper and groupers.”

However, the study said Bahamian landlords suffered a significant loss of rental income as a result of foreign tenants leaving the country during COVID while many locals were unable to make due payments due to loss of income and being temporarily furloughed.

“According to the baseline analysis, 3,096 homes were rented by foreigners who left the country,” the IDB/ECLAC report said. “Using the 2021 baseline home value as a base plus the land value, the loss of those rentals can be estimated in the amount of $118.325m in those 20 months, representing 0.94 percent of GDP in 2021.

“The most significant impact on the reduction of income from rental housing is noticeable in New Providence for a total of $82.4m, Grand Bahama with $16.6m, Abaco with $5.2m, and Eleuthera with $5m.”

Nor did the utilities, namely the Water & Sewerage Corporation and Bahamas Power & Light (BPL), escape unscathed as the increase in residential consumption - with more persons forced to live and work at home due to COVID and accompanying government regulation - partially offsetting drop-off in commercial use.

“Lockdowns instantaneously reduced water consumption in those companies or agencies that started home office,” the IDB/ECLAC report said. “At the same time, residential consumption presented two different effects: An increase, given the suddenly high number of people isolated at home, but also a reduction, since the international borders were closed, and owners and renters ultimately vacated many second houses during a period of restrictions.

“Total loss for this sector rises to $55.8m, which is the combination of residential and non-residential customers. This value considers the losses of 2020 and 2021, and the projected losses for 2022 and 2023. The losses are calculated as the difference between the projected consumption in a COVID-19-free context and the projected consumption under COVID-19, considering 2020 and 2021 actual consumptions.”

It was a similar tale at BPL. “Losses were estimated at $25m, of which 90 percent occurred between 2020 and 2021,” the study added. “The pandemic response measures caused people to stay in their homes longer and their electricity consumption increased above what was expected prior to the pandemic. This makes the billing exceed that of the baseline.

“On the contrary, border closures and other mobility restriction measures reduced commercial turnover. Losses for this concept reached $36m but were partially offset by the increase in household consumption.” It is unclear, though, whether the analysis also includes the impact of ‘do not disconnect’ instructions issued to the utilities for much of the pandemic.