The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamians must “brace” for a potential global depression and repeat of the 2008-2009 economic contraction, which saw thousands lose their jobs, due to Donald Trump’s tariff policies, a local economist is warning.

Therese Turner-Jones, a former senior Inter-American Development Bank (IDB) and Caribbean Development Bank (CDB) executive, told an Organisation for Responsible Governance (ORG) seminar she is “not being dramatic, but realistic” about the likely fall-out the Bahamian economy and this nation’s citizens face as a result of the US president’s actions in starting a possible global trade war.

Suggesting that she was being “milder” than other commentators in her reaction to Mr Trump’s move to totally rip-up the long-established global economic order, she added that The Bahamas now finds itself in a landscape that is “going to look very different for the rest of this year” with previous forecasts now likely shredded.

Asserting that The Bahamas is “going to be hit very, very, very, very hard” by the US president’s imposition of so-called “reciprocal” tariffs on virtually all other nations, with Russia being a notable exception, Ms Turner-Jones said the actual 10 percent levy imposed on this nation’s exports to North America is “the least of the problems”.

While the tariff will make Bahamian exports to the US, which totalled $608.176m in 2023, more expensive and potentially less competitive, she echoed the Government in agreeing that the biggest impact will come from how it disrupts the global economy and, most importantly, the US given that it is the source market generating up to 90 percent of this nation’s annual tourists.

“We also have to brace ourselves for a recession in the US, possibly a depression globally, and we could be back to 2008 with what happened globally,” Ms Turner-Jones warned. “And I’m not being dramatic; I’m being very realistic, and I’m probably being milder than some of the other commentators including Federal Reserve chairman, Jerome Powell, today.

“I think we have to be extremely conscious that things are going to look very different for the rest of this year so Bahamians have to brace themselves.” Few Bahamians will look back on, and remember, the 2008-2009 recession, which was triggered by the preceding global ‘credit crunch’ and financial crisis, with any fondness as the economy shrank by 2.3 percent and 4.2 percent, respectively, over those two years.

Atlantis was forced to terminate 800 workers, or 10 percent of its then-total staff, after US travel demand plummeted, and other Bahamian resorts subsequently followed suit by releasing several hundred workers of their own. The impact rippled through the Bahamian economy to hit other businesses, resulting in several thousand workers losing their jobs.

The International Monetary Fund (IMF) later wrote that The Bahamas’ recovery from the 2008-2009 recession was “painfully slow”, with economic growth in subsequent years averaging between 1 percent to 1.5 percent. A repeat or re-run of that period will not be what any Bahamian is hoping for, but Ms Turner-Jones warned that it is now a real possibility due to Mr Trump.

“Clearly we are going to be hit very, very, very, very hard by the increase in tariffs,” she told the ORG seminar, “and not just because there is a 10 percent on us. That’s the least of the problems. It’s the disruption that’s really going to come from what’s happening in the rest of the world and how that’s going to affect the global economy.

“Shielded we are not. We cannot protect ourselves from that. What we have to do is ensure that, one, we are following the information and, two, prepared to make some difficult decisions. Much will depend on how long Mr Trump’s tariffs, many of which took full effect over the weekend, remain in place, whether they are increased or decreased, and when.

A lot will also hinge on how the rest of the world reacts, and how many countries race to Washington D.C. to seek a removal or reduction of tariffs on themselves and/or strike free trade deals with Mr Trump. Other nations, though, could follow China’s lead by imposing retaliatory tariffs on US imports to their countries, potentially triggering a cycle of ‘tit-for-tat’ rate hikes and a full-blown global trade war.

Given that tariffs are taxes levied on imported goods at the border, US consumers are almost certainly the ones going to be paying the increased cost associated with the US president’s ambitions for his new policy to drive manufacturers and industry to relocate back to North America and bring jobs with them.

This, in turn, threatens to reduce the disposable income and wealth enjoyed by US citizens and, if living standards are reduced, among the first things to usually be sacrificed are discretionary spending on items such as vacations to The Bahamas.

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, said as much at last week’s south and central Eleuthera Business Outlook conference: “We anticipate over the course of the next few months that there will consistently be some uncertainty in the marketplace.

“Yesterday and today, the world is swirling as a result of the tariff wars, which is going to result in an overall increase in the cost of living, particularly for Americans. Eighty percent of our tourists come from the USA, and therefore this will have some resulting impact on our major industry.”

However, Thomas Sands, the Eleuthera Chamber of Commerce president, said potential and existing foreign investors were urging the island “not to be distracted by the noise to the north” and instead focus on what it can control and makes it an attractive location to do business despite concerns over the economic fall-out.

“We are hopeful... that the present economic growth continues, and it’s incredible momentum is continued, despite the new level of global disruption and uncertainty,” Mr Sands said. “Smart and sophisticated investors who love Eleuthera tell me not to be distracted by the noise to the north but, instead, Eleuthera should stay the course and the end result will drive even more desire to invest in and live in Eleuthera.”

Ms Turner-Jones, meanwhile, said The Bahamas’ dependence on the US for nine out of every ten tourists, as well as the majority of its imported food, other goods and supply chain logistics, “may come to bite us” in the aftermath of Mr Trump’s tariff imposition.

While praising the urgency with which the Davis administration is seeking to develop new supply chains and routes, and source product from markets outside the US, she warned this would take time to set up and bear fruit.

“The one I keep hearing from the administration this week is, oh, we need to find other ways to import foods into The Bahamas,” Ms Turner-Jones said, “which, while that’s a really good idea, the logistics of shipping - let’s call it between South America and the Caribbean - is under-developed and, while having spent 10 years at the IDB and been through how we can improve integration efforts between the Caribbean and Central America and Latin America, we have not been able to do that.

“There’s a tremendous space there for opportunities. I’m happy to hear that from the administration, but it’s just.... not easy to do. We are so much tied to the logistics of the US for shipping and maritime routes and so on. Even our airlines; most of our flights are connected to North America. It will take some time.

“The Government needs to sit at the table, invite our European partners to say what we can do, how we can get the airlift from Europe if the Americans, there’s going to be a crash in that economy. What can we do to get our business from quickly and what can we do to diversify where our goods come from?”