The economic consequences of the current COVID-19 crisis are unprecedented for Trinidad and Tobago and several sectors including tourism, manufacturing, construction, and hospitality industries will be hardest hit.
This according to the newly released Caribbean Quarterly Bulletin of the Inter-American Development Bank (IDB).
It added that furthermore, lower global oil and gas prices will adversely affect this country’s energy sector and related investments.
“Taken together, these and related impacts may result in a severe economic contraction over the next year,” the IDB noted.
The report however, highlighted the Government’s measures, including accelerated VAT and income tax refunds, temporary deferral of loan and mortgage payments, distribution of food cards, a salary relief grant for the unemployed, rental assistance, financial assistance for credit unions to stimulate lending and a grant for affected hoteliers in Tobago.
However, the IBD said these measures will come at a fiscal cost and require additional borrowing, implying a larger than expected fiscal deficit.
The report has suggested that the development of a comprehensive economic and fiscal recovery plan for the post-pandemic period will therefore, be an important step going forward.
The report also assessed the economic impacts of the virus on key sectors including trade and tourism, reviews policies being undertaken by governments in the region, and provides recommendations on further efforts policy-makers should take in order to mitigate the economic fallout of the crisis.
It noted that the crisis is unprecedented, and that its economic impact is likely to be severe not only for T&T but for The Bahamas, Barbados, Guyana, Jamaica and Suriname.
The report also presented newly developed data, and used scenarios to highlight the potential magnitude of economic shocks to Caribbean countries. It also explored various transmission channels through which the crisis will impact economies in the region, and highlights some of the most important vulnerabilities that policy-makers will have to focus on when developing their response packages.
It recommends governments in the region take immediate action to contain both the virus itself, and its economic impacts via prudent use of the full spectrum of policy measures available to them.
According to the report, measures to flatten the curve are essential to “keep the human capital stock healthy, for when the crisis is over.” The study also says that given limited fiscal space and the importance of safeguarding long-term debt sustainability, policy measures should be “targeted and temporary.”