IMF: The effects of COVID can exacerbate the Bahamas’ record of low growth

The Bahamas will continue to face low-growth scenarios for the next few years as a result of the impact of the COVID-19 pandemic. The International Monetary Fund (IMF) predicts medium-term growth of 1.5% given the slow implementation of structural reforms in the country. Implementation of alternative energy initiatives is slow.

The IMF made its predictions in a statement of conclusions for the 2022 Article 4 consultations released yesterday.

The IMF explained that the pandemic is likely to “worse” the country’s low-growth record.

“Given the variety of distance learning qualities, the education gap is likely to be widespread and exacerbated even before the pandemic,” the IMF said.

“Private investment and employment will take time to recover. In addition, the economy will have to combat the lasting impact of the pandemic on travel preferences, technological changes and climate change.

“Without definitive reforms to increase productivity and encourage private investment, the long-term difference in GDP per capita that the Bahamas sees against the United States is expected to continue.”

The IMF has seen tourism-led rebounds since the country reopened, and during the pandemic the economy “expanded almost 14% in 2021 as net tourism revenues tripled compared to 2020.” I admitted that I did.

The IMF report predicts that the country will not return to pre-pandemic visitor numbers until 2024, but explained that a strong recovery will continue until the end of the year.

Other officials predict that pre-pandemic numbers could return by early 2023.

“The pandemic has deepened the challenges of medium-term growth and the public finances have deteriorated,” the report said.

“Youth experience significant learning losses and employment takes longer to recover. In addition, pandemics can have a lasting impact on travel, technology change and climate risk.”

The IMF report adds that the downside risk to the Bahamas’ growth remains high when compared to the upside forecast.

The report explained that these risks include a new variant of COVID-19. New pressure on world food and oil prices from the war in Ukraine. The sharp rise in the global risk premium can put additional strain on public and private balance sheets. Natural disasters related to climate change.

“When downside risks become apparent, governments need to find ways to provide additional financial support, including targeted social support, which can significantly reduce financial space and create new sources of funding. Given that it may not be available, it can turn out to be difficult, “the IMF said.