The Eastern Caribbean Central Bank (ECCB) predicts a contraction averaging between 10 and 20 percent in economies of the Eastern Caribbean Currency Union (ECCU) for 2020 due to the impact of COVID-19 according to ECCB Governor Timothy Antoine on Saturday.
He noted that this was due to the fall in foreign exchange earnings, job cuts, and loss of government revenue from the tourism industry, the largest sector in the ECCU countries which have ground to a halt.
In addition, there has been a sharp rise in unemployment across all sectors in the ECCU. Unemployment is expected to reach 50 percent in at least two ECCU countries. Antoine also noted that the governments are seeing revenues plummet by as much as 50 percent with one country at about 75%.
The ECCB Governor observed that the fall in remittances to the region particularly due to the massive layoffs in the United States is having an adverse impact on the people and the region.
“In fact we may see a phenomenon we observed after the global financial crisis when we saw reverse remittances – that is, people in our currency union sending money to people in the United States and the UK,” he indicated.
In the short term, the region will also see a decline in foreign direct investment, said Antoine.
The economic damage is likely to outlast the pandemic, the governor said. “At this moment, the biggest question is ‘When will tourism rebound?” Antoine declared.
“In the absence of a vaccine, we are likely to have a protracted recovery process so that 12 to 18 months does not appear in my estimation to be unreasonable at this stage,” he noted.