Jan Yves Remy | What COVID-19 teaches about Caribbean vulnerability and resilience

OP-ED CONTRIBUTION: COVID & CARIBBEAN ECONOMY

The COVID-19 coronavirus disease is making the global economy sick. Like the pandemic itself, COVID-19 has invaded the global economic bloodstream, placing its vital organs in distress with no immediate cure.

Whether large or small, no country is immune from this contagion.

Perhaps for the first time in modern history, the whole world is feeling truly vulnerable. However, while larger countries can rely on their greater financial and human resources to rebound from COVID-19, vulnerability for Caribbean states is a chronic condition. How the region draws upon its characteristic resilience to guide us in overcoming our vulnerabilities in these unprecedented times is certainly worthy of consideration.

The Caribbean has repeatedly demanded recognition from the international community that social, economic and environmental factors put Small Island Developing States, SIDS, at peculiar risk. In the World Trade Organization, WTO, Caribbean countries were the first to advocate for a separate sub-category of ‘Small Vulnerable Economies’, requiring fellow WTO Members to take special account of our needs when crafting trade deals.

The WTO community will itself have to take advantage of exceptional provisions in trade agreements – like health and national security exceptions, and subsidies rules – to accommodate emergency measures being taken to deal with COVID-19. Might they now be more sympathetic to our additional needs? As we have argued before, our vulnerabilities are permanent and will not disappear when COVID-19 does.

The region’s extreme vulnerabilities, as exposed by the virus, can be measured along three main dimensions: the social, economic and environmental.

At the social level, the Caribbean’s ageing population and high rate of non-communicable diseases places the region’s population at greater vulnerability to the more severe effects of COVID-19. The toll on the working population and public budget strain from increasing health care expenditure will compromise existing social systems.

At the economic level, the region’s economies were not in the ‘pink of health’, even pre-COVID 19. The Caribbean Development Bank, CDB, alludes to the already low regional GDP growth rates, high rates of unemployment, and underdevelopment of many regional economies.

With a US$5.36 billion food import bill, the region’s food security could be further undermined by a COVID-19 related price hike or restrictions by net food-exporting countries on food exports.

Economic inoculation

The lack of a diversified export base is another economic vulnerability. With sharp declines in transport and economic activity, global oil demand is expected to fall by as much as 730,000 barrels a day, which could negatively impact oil-exporting countries like Trinidad & Tobago, Suriname and Guyana. With the World Travel and Tourism Council predicting a 25 per cent reduction in international travel with 50 million jobs globally at risk, tourism-dependent regional economies will also suffer.

Major airlines and cruise ships are suspending travel operations. The Organisation of Eastern Caribbean States, OECS, anticipates a 20 per cent decline in the tourism industry under a best-case scenario where COVID-19 is contained by June 2020.

Cancelled shows and festivals will impact the earnings of service providers dependent on these events, and also deprive our economies of the expected tourist arrivals and foreign exchange inflows.

As for environmental vulnerabilities, the emphasis on hand-washing highlights the region’s water scarcity, resulting from climate change. The Caribbean Drought and Precipitation Monitoring Network has warned, particularly the Eastern Caribbean, of extended drought periods with increasing intensity.

Just as a body can improve its immune system to build resistance to diseases so too must the Caribbean demonstrate our resilience, as we have done in the past.

Once the immediacy of the situation passes, our recovery process must begin with our economic response. Building economic resilience starts with fiscal responsibility and keeping debt to GDP ratios at healthy levels. An economy which relies so heavily on one sector for economic growth, employment and foreign exchange is particularly vulnerable to any shocks affecting that sector. Our economies must not only diversify, but fully embrace new growth industries, such as renewable energy, and prioritise food security.

Embracing change

We must also embrace the new economy. COVID-19 is forcing the use of online technologies as more of our daily transactions move online, pushing governments, businesses and the ordinary citizen to embrace the digital age. If ever there was a time to consider our digital strategies – most Caricom states lack one – that time is now.

Overcoming social vulnerabilities will require building the resilience of our human resource by reducing poverty, improving the health of our populations, lowering the NCD burden, and improving the education system.

On the environmental front, the region must tackle its water scarcity problem, including making the improvement of our water management practices a priority for our governments and communities.

Finally, regional leaders have realised that COVID-19 requires a collective, regional response and have engaged in unprecedented levels of coordination with each other and with external donors and organizations.

Regional leaders have been meeting virtually, proving that there are more efficient ways of communicating to advance our regional agenda. We hope that this will also lead to more transparency in the way decisions are communicated to the ordinary citizen.

COVID-19 will probably change the world forever, but, in time, the global economy will recover.

Larger resource-endowed states will undoubtedly return to normal faster than we will. The Caribbean will never be completely immune to shocks, but having gone through this shared moment of international vulnerability, we must reiterate that the Caribbean has peculiar circumstances that deserve attention.

The pandemic also presents a teaching moment for the global community that we have remarkable resilience in overcoming the odds.

This article was co-written by Deputy Director Dr Jan Yves Remy, Alicia Nicholls and Chelcee Brathwaite of the Shridath Ramphal Centre for International Trade Law, Policy & Services, who are regulator contributors to SRC Trading Thoughts.

janyves.remy@cavehill.uwi.edu