The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas would have taken a “cataclysmic” hit if Hurricane Dorian struck Nassau, Moody’s Analytics believes, while still predicting the storm has cost this nation between $3bn to $5bn.

Adam Kamins, senior regional economist at Moody’s Analytics, which operates independently of its credit rating agency counterpart, said initial estimates showed the vast majority of physical damage and economic loss had been inflicted upon this nation.

With tourism accounting for around 50 percent of Bahamian gross domestic product (GDP), and 20 percent of this nation’s room inventory out of action due to the devastation in Abaco and Grand Bahama, Mr Kamins forecast that “ten percent of output may have been removed from the economy”.

He added that if there was “a silver lining” from the storm it was the fact New Providence, home to Nassau and the majority of this nation’s economic assets, had been spared a direct hit by the Category Five storm that devastated the second and third most-populated islands.

“Perhaps the silver lining is that Nassau was mostly unaffected,” said Mr Kamins in an analysis sent to Tribune Business. “As home to the majority of the Bahamas’ residents and tourist attractions, a direct hit would have been cataclysmic for the nation.

“So while the worst-case scenario was avoided, the second worst came to fruition. The resulting scars - economic, as well as emotional and physical - could leave a permanent mark on the islands’ economy.”

He continued: “The devastation wrought by Hurricane Dorian in the Bahamas is still coming to light. The death toll sits at [over] 50, and is likely to increase dramatically. With tens of thousands of homeless residents, Grand Bahama and the Abaco Islands are left with a humanitarian crisis unlike anything in the nation’s history.

“In the midst of this horror, the storm’s price tag is also starting to grow clearer. Based on preliminary calculations by Moody’s Analytics, Dorian will cost $3.5bn to $6.5bn, reflecting damage and lost output. The majority of this comes from The Bahamas, where the initial cost is between $3bn and $5bn.”

Similar assessments have been made by other risk modelling and damage assessment agencies, with Mr Kamins branding the extent of the physical destruction and economic loss as “stunning” given the size of The Bahamas’ population and the areas that were affected.

“Though this is a far smaller cost than that of other recent hurricanes,” he said of his estimates, “the amount is stunning in context of the small geographic footprint of the affected area. Only about 70,000 people live in the areas that took a direct hit from the storm while it was a major hurricane.

“Comparatively, Hurricane Maria affected a population that was more than 40 times’ larger but cost only 10 to 20 times more. On a per capita basis, Dorian packed a punch that may well have been unprecedented.”

Mr Kamins forecast that damage to property alone would amount to $2bn in the two impacted islands. “The economic toll is driven predominantly by damage to property,” he warned. “Early estimates suggest that nearly half of the homes on Grand Bahama and the Abacos were significantly damaged.

“Using data on population per household for The Bahamas, and third-party estimates of average house prices, the cost to the residential market is around $2bn. This accounts for both an upward adjustment to capture personal property, and a downward adjustment to reflect that lower-end homes were more likely to be destroyed in the storm.”

Mr Kamins continued: “ Of course, the housing market only tells part of the story. Much of the vehicle stock on both islands was destroyed. This not only includes cars that are inoperable because of flooding, but boats that were lost in the storm.

“And, of course, infrastructure on the affected islands was devastated. Grand Bahama International Airport in Freeport will require substantial rebuilding, roads have been destroyed, and basic systems such as sewage and water are badly compromised.

“The physical damage will be accompanied by a significant reduction in tourist dollars flowing into Th3 Bahamas. The most obvious channel is a reduction in near-to-medium-term visitors, which will badly sting a nation where tourism may be responsible for as much as half of GDP.

“With nearly 20 percent of the nation’s hotel rooms closed, according to data from the Ministry of Tourism, this means that 10 percent of output may have been removed from the economy. Further adding to the cost is the physical damage to resorts and attractions in Grand Bahama, requiring a major rebuilding effort.”

Bahamian insurers last week suggested that claims payouts from Dorian may exceed $500m, a record for a single storm impacting The Bahamas. Ex-prime minister Hubert Ingraham later placed the figure at some $600m, with both figures ignoring the properties and businesses that are either uninsured or underinsured.

Separately, Tribune Business was told that Dorian’s storm surge stopped just short of the industrial park housing many of Grand Bahama’s large manufacturers such as the BORCO oil storage terminal, Pharmachem and Grand Bahama Power Company.

This newspaper’s contacts suggested that the greatest challenge facing many of the island’s larger employers as they seek to re-open is the provision of electricity and water supply, which is key to a safe working environment. Water, especially, is understood to be an issue after salt water compromised the wellfields and system infrastructure.