The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister has predicted that the Bahamian economy and its vital tourism industry will feel COVID-19's negative impact for at least a further two years.

Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business it was "anyone's guess" when visitor bookings and volumes will return to pre-pandemic levels as Atlantis delayed its re-opening by 23 days due to the surge in infections in its core market.

"Let's put it this way; this pandemic is probably going to affect us for the next 12-24 months," he replied, when asked by this newspaper when the industry will start to fully rebound.

"When we return to pre-COVID conditions is anyone's guess. We remain hopeful that will happen in the next 12-24 months, but it relies on continuing to control the spread and, ultimately, the creation of a COVID-19 vaccine."

The latter development is likely to still be months out, if it ever occurs at all. Mr D'Aguilar, meanwhile, revealed that The Bahamas is now almost totally dependent on the US to kick-start its tourism revival due to Canada's travel restrictions effectively knocking out eight to nine percent of its visitor market.

He pointed out that Canada's requirement for persons returning from abroad to quarantine for 14 days was a major disincentive to travel for leisure/tourism purposes. With Europe's borders still largely shut down, this has left The Bahamas almost totally reliant on a US nation where new daily COVID-19 cases yesterday hit 45,000.

"It's the conundrum," Mr D'Aguilar told Tribune Business. "The US, which is our core market, we're going to have to open very slowly and cautiously to ensure we don't experience any increase in The Bahamas.

"Canada has a 14-day quarantine test when you return. They're really trying to discourage you from travel from Canada, which is our second largest market. The US is currently our only potential market for tourism."

The minister's comments came as a new study by the Inter-American Development Bank (IDB) reinforced that The Bahamas, together with Aruba and St Lucia, are the three tourism-dependent economies being most impacted by COVID-19's fall-out.

A policy brief, by Henry Mooney and Maria Alejandra Zegarra, looked at the impact on economic output (GDP), employment and the balance of payments (export earnings) for all countries in the Latin American and Caribbean region based on three scenarios.

The most optimistic of these assumes a 50 percent rebound in tourism flows in the just-started 2020 third quarter, followed by a 75 percent recovery in the final three months of the year. The second scenario assumes a 25 percent and 50 percent recovery in these two periods respectively, and the worst only a 25 percent return in the fourth quarter.

All write-off the 2020 second quarter lockdown by 100 percent. The IDD study predicts that Bahamian GDP will fall by between 8.4 percent and 13.2 percent, depending on whether the best or worst outlook comes true, with employment set to reduce by between 11.6 percent and 18.8 percent.

Many observers will likely argue that both are an under-estimate. Moody's, the Prime Minister and others have all predicted that the economy may shrink by up to 20 percent this year, while the National Insurance Board (NIB) yesterday said 35,000 persons have to-date applied for unemployment benefit alone.

Dr Hubert Minnis himself has suggested that the national unemployment rate is around 30 percent, and this week's Baha Mar and Melia terminations are likely to send that soaring further towards 40 percent.

The IDB report, meanwhile, said The Bahamas was set to lose between 11 percent and 17.3 percent of its annual export earnings depending on the severity of COVID-19's impact on tourism.

Mr D'Aguilar, meanwhile, confirmed that the Government had chosen to narrow the timeframe in which visitors must obtain a negative COVID-19 PCR test from ten days to seven in order to better protect The Bahamas from increased infections.

"The reason we reduced it from ten days to seven is to improve the accuracy of the test when persons arrive at the border," he explained. "Health officials felt a test between zero and seven days was a better indicator of COVID-19 status than ten days.

"They closed that window to seven days. It will probably deter more people from coming to The Bahamas but that's the balance we in tourism have to monitor every day. How wide do we open and maintain our current excellent COVID-19 status? This is the conundrum we deal with every day. How do we start our economy in the safest possible way?"

Mr D'Aguilar acknowledged tourism and hotel industry concerns over the frequently-changing testing and health requirements for visitors to be admitted to The Bahama, and added "What is frustrating to industry is that you're constantly changing the goal posts.

"The tourism sector worldwide is very unsettled right now, and that's going to significantly impact employment. It's very disconcerting not to have a job, and very troubling to the Government that people are not able to go back to work, but this pandemic is something new and affecting tourism-dependent economies and the world.

"There's going to be twists and turns for some time to come as we open and readjust the tourism component of our economy. At this moment there's nothing unexpected. Businesses are going to have to adjust based on the level of demand for their services.

"This is something no one really expected in their lifetime, and this level of uncertainty will probably result in stops and starts."