The Covid-19 “pandemic is a health crisis. But not just a health crisis.”[i]It has presented human, social and economic challenges and has exposed the gap between the haves and the have nots, both within and between countries. The pandemic has caused human suffering along with economic and financial distress. The protracted health crisis has also revealed the structural inequalities within the healthcare sector. The advent of the pandemic has highlighted the need for close cooperation among States.
Within the Latin America and the Caribbean region (LAC), all nations have been affected by the Covid-19 virus in varying degrees. For the Caribbean, the pandemic has been especially devastating. From the health perspective, competing priorities, scant supplies, limited resources and complicated logistics have posed a challenge to plan for rapidly up-scaling the healthcare facilities and other services essential to cater to pandemic patients. From the economic outlook, most nations of the region are dependent on tourism, a sector that has suffered the maximum due to restrictions on movement of people.
This paper looks at the effects of the pandemic in the Caribbean. It will also look at the opportunities that the pandemic has provided the island nations and the trajectory of the future cooperation in the region.
The Challenges from the Pandemic
The coronavirus disease arrived in Latin America and the Caribbean at a time of low growth, growing poverty marked by inequality and vulnerability and expressions of social discontent by the people.
For the Caribbean, the pandemic has added to the devastation that is caused by natural phenomenon such as hurricanes and typhoons. Training rescuers, increasing medical capacity and sourcing protective equipment are among the major challenges for the Caribbean, where a sharp drop in tourism and trade has dealt a heavy blow to many cash-strapped countries.
The pandemic has battered the economies of the Caribbean, largely dependent on tourism, reducing household incomes and decreasing the purchasing power. The lockdowns have restricted the movement of people, which are needed to stop the rapid spread of the coronavirus and save lives, have led to job losses (11.6 million more unemployed in 2020, compared to 2019)[ii]. The loss of income is primarily affecting the people that work in the informal sector, working in activities that are more exposed to layoffs and pay cuts and, in the services sector. Households have been reducing their consumption on most goods and services during lockdowns and it has remained low due after containment measures have been gradually phased out.
For the Caribbean the economic costs of the pandemic are likely to be felt even after the countries overcome/control the health emergency. The primary reason for this long-term economic slowdown is the heavy reliance on tourism. Containment measures, restrictions to border crossing, and movement of people have affected key sectors such as tourism and international travel. In the Caribbean, the tourism sector’s share in most countries’ Gross Domestic Product (GDP) ranges between 30% and 90%(direct and indirect contribution), and the sector accounts, in most countries, for more than 50% of direct employment apart from those dependent on the sector indirectly or by through providing auxiliary services. Women are expected to be especially affected, as about 60% of employees of the tourism sector are women.[iii]The loss of jobs has largely affected the youth, the less educated and women, increasing inequality and poverty. With annual hotel stays reducing by 70% and cruise ship travel completely halted, tourism-dependent countries contracted by 9.8% in 2020[iv].Most Caribbean countries have managed to contain the virus’ spread initially, and reopened to international travellers in the second half of 2020. However, renewed waves of infections and travel restrictions in the countries where most visitors normally come from (US, UK, and Canada) has put on hold the much hoped-for tourism sector rebound. This has led to further domino effect in the industry with hotels, resorts and associated tourism services (restaurants, shops and tour operators) closing or filing for bankruptcy. With fewer flights and less passengers, and surging oil prices, airlines are also struggling to recover. Other sectors such as retail trade, wholesale trade and manufacturing sectors are affected. With job security not being guaranteed it will further reduce the purchasing power of the people.
Another challenge that the region is facing is a reduction in remittances. This is because the key sources of remittances for the Caribbean such as the US, UK and Canada, have only recently begun to partially lift the lockdown measures. Remittances to the Caribbean in 2019 were close to US$12.7 billion. With low remittances, economic slowdown and prevailing debt, the risks to the fiscal accounts of the Caribbean nations are in a stress as international investments would not look at the region favourably. In addition, many countries of the region face long-standing external debt. Some Caribbean countries are among the most indebted economies in the world; the average debt reached 68.5% of GDP in 2019. High levels of debt restrict countries access to credit, thus further limiting their abilities to address the impacts of COVID-19. The global slowdown and the disruption of global and regional value chains generated a decline in exports from the region. This in turn has reduced the export led tax revenue and foreign exchange which is used to import food and other essential goods. The rising price of global oil also added to the fiscal stress of the Caribbean economies.
The COVID-19 pandemic has accentuated the challenges confronted by the region and has called for new initiatives to tackle long-standing issues. With limited social security coverage, the governments of the region are working to find solutions to open the economy while containing the spread of the virus. Governments are advocating for debt relief, disaster clauses in sovereign debt contracts and changes to international aid rules. At present, some funds are finding their way to the Caribbean economies; for example, from the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB).
As small developing economies with low levels of export diversification (in terms of goods/services and markets), harnessing the blue economy could afford some relief to these States as they look for post Covid-19 recovery and long-term sustainability. The pandemic has highlighted the importance of a collective approach from the region for economic cooperation.
Challenges in the Health Care Sector
Given the limited capacity of the individual nations of the Caribbean, the pandemic has strained the existing healthcare systems and exposed the limitations within the system. The countries also face challenges in the purchase of essential medical equipment and vaccines.
The Caribbean is witnessing higher numbers of deaths compared to both Latin America and North America. There is also significant variation in the rate at which Caribbean countries and territories have been able to vaccinate their populations against COVID-19. According to the Pan- American Health Organisation (PAHO) till August 11, 2021, over 1.1 million people in the Caribbean, comprising about 15% of the population have been fully vaccinated.[v]The low level of vaccination likely explains the rise in infection and deaths in the Caribbean. The main difficulty encountered by Caribbean countries in their efforts to expand immunisation coverage has been the difficulties experienced in obtaining supplies of the vaccines in sufficient quantities. The LAC region is heavily dependent on imports of both medicines and the raw materials for the healthcare sector and the vast majority of high-income countries have delayed the supply of COVID-19 vaccines.[vi]
The delaying tactics by the developed nations in supplying Covid-19 vaccines has promoted the region to develop contingency and preparedness plans for access to goods and health services, as well as measures for the movement of goods and services to avoid contagion. The PAHO has also committed to use its Revolving Fund, which is used to procure other vaccines for the region at low prices, to procure Covid-19 vaccines beyond the commitments made by COVAX. The Revolving Fund consolidates regional demand so that vaccines can be procured in bulk. It also procures syringes, cold-chain equipment, and other supplies.[vii]
In that context, governments of the region have called upon each other to work together to set coherent policies on health, logistics and transport. A cooperative and strategic approach to negotiate for healthcare need on a regional basis has been seen as the way forward. Member States of the CARICOM agreed on a Common Public Health policy which included procurement of goods. This also set common standards for the intra-regional transportation of people and goods. At present, governments remain committed to continue working together to incrementally and safely open ports and airports.[viii]
The Recovery Plan by the Caribbean
Policymakers are focused on recovery in 2021 and beyond, and are considering ways to provide economic stimulus that will help accelerate a return to the pre-pandemic growth path, and reorient economies to enable faster productivity growth, for both short and long term. This includes near term goals of offsetting the effects of the containment strategic and restarting production units to generate employment to long term goals of embracing new technologies, and focusing on higher value-added sectors.
As the Caribbean economies start their economic recovery, the regional growth is expected to reach 6.3 percent for 2021, almost recovering the 6.7 % losses of 2020. Given the recoveries of their trading partners, growth rates might be expected to be 1.5 % points higher.[ix] Most countries of the region are implementing fiscal packages that include additional health spending, temporary cash transfers for displaced workers, credit support to small and medium-sized firms and affected sectors— such as tourism, transport, and agriculture, expansion of social safety net programs for vulnerable groups (e.g., food and income support), reduction or deferral of some taxes and electricity tariffs, and tax and custom duty waivers on essential food and hygiene product imports. In addition, central banks of some economies (e.g., Aruba, Barbados, Belize, Haiti, Jamaica, and Trinidad and Tobago) are supporting economic activity by reducing policy rates and/or reserve requirements or are providing liquidity assistance through other facilities. Also, banks and other financial institutions have put in place measures to help customers with their financial obligations, such as waiving late fees and offering short-term payment deferrals.
In the short to medium term they could focus on; Cooperation in Healthcare Sector-The Organisation of Eastern Caribbean States (OECS) maintains a successful Pharmaceutical Procurement Program. The OECS could explore expanding the reach of the programme to include members from the wider Caribbean community. The Covid-19 pandemic has presented yet another opportunity for Caribbean healthcare policymakers to engage in multilateral cooperation, so as to build robust health care systems. CARICOM, the Pan American Health Organization (PAHO), the Caribbean Public Health Agency (CARPHA) and the Organisation of Eastern Caribbean States (OECS) worked together to contain and manage the epidemic. Such cooperation needs to be maintained as a permanent feature of regional healthcare provision. Both regional and global cooperation among governments and international agencies will be key to mitigating the spread of the Covid-19 virus and also other communicable diseases in the future.[x]
Along with the above there is also a need to Improve Financial Access. – At the regional level, the pandemic has provided an opportunity to strengthen regional cooperation by improving the lending and response capacity of regional, sub-regional and national development banks and other regional institutions.[xi] At the national level, the pandemic provides an opportunity for the countries of the region to improve digital financial services to accelerate and enhance financial inclusion, amid social distancing and containment measures. During the COVID-19 crisis, access to government electronic systems that are well integrated with digital financial services platforms such as fintech firms, mobile money companies, and digital banking have proved to be critical in providing wide-reaching policy support promptly and without physical contact.[xii]
The governments of the region need to develop both near term and long-term plans for investment in the infrastructure development sector. This is relevant for developing and emerging market economies which would like to expand their reach. For example, by increasing an economy’s productive capacity through better roads, airports, or improved water and power infrastructure, public investment increases the marginal product of capital and labour. Caribbean countries are particularly well placed to benefit from increased or accelerated public investment, in part because of the region’s history of underinvestment in infrastructure, especially over the past decade.
Digital Transformation- Related to the above two is the need for a digital revolution. The COVID-19 pandemic has reinforced the importance of telecommunications and digital technology, while also accelerating pre-existing trends towards virtual service delivery and work. Developing countries, including the Caribbean, have long suffered from important gaps in technological infrastructure. These deficits will be even more consequential for growth and social development prospects in the years to come. The spread of the Internet and the adoption of digital technologies has proved to help build some continuity in business, working or studying from home during the crisis. However, the digital divide, notably the lack of high-speed broadband Internet and appropriate digital skills, have prevented many, especially the most vulnerable, from reaping the benefits of these solutions. Expansion of digital infrastructure is relatively cheap and could increase productivity, connect rural areas, and build in resilience to future crises, for instance, through broader access to distance learning.[xiii]
The Covid-19 crisis presents not only as human, social and economic challenges globally but demonstrates just how interdependent we all are. Prior to the advent of Covid-19, the world had been visited by smaller scale epidemics, which had promoted countries to build individual plans of action. Lessons from these have been implemented to fight Covid-19, nonetheless the global reach and scale of the virus has highlighted the need on a regional basis, for: capacity building; data gathering and analysis; placing a higher priority on healthcare in budgetary allocation, and more emphasis on research and development of medicines and production of medical equipments. The lockdowns that were placed to contain the spread of the virus have had severe adverse effects on the global economy. Individual governments have had to strike a balance between implementing these measures and preventing the collapse of their economies, in the face of healthcare systems and social safety nets stretched beyond capacity.
For many Caribbean countries, COVID-19 has generated the largest single-year economic contraction on record. While the virus continues to prevail, policymakers have to make decisions on steps to mitigate the effects of the crisis, ensure fiscal and debt outcomes do not spiral out of control while containing the spread of the virus. The Caribbean has been able to make use of its experience of handling natural disasters such as hurricanes along with its NCD experience to manage the Covid-19 crisis. However, the limitations in its healthcare infrastructure have also become clear. As a well integrated region, the governments can take advantage of this opportunity to rebuild their economies in ways that help mitigate vulnerabilities to future shocks, which can also help accelerate growth in years to come and work towards innovative solution to address the healthcare challenges particular to the region.
*Dr. Stuti Banerjee, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: Views expressed are personal.
[i] UNDP Administrator Achim Steiner, “Coronavirus vs. Inequality”, UNDP, https://feature.undp.org/coronavirus-vs-inequality/, Accessed on 09 November 2021.
[ii]UN ECLAC, “The social challenge in times of COVID-19,” 12 May 2020, https://repositorio.cepal.org/bitstream/handle/11362/45544/1/S2000324_en.pdf, Accessed on 09 November 2021.
[iii]Henry Mooney, “The Pandemic’s Unprecedented Shock and Opportunity for the Caribbean,” Colombia Journal of International Affairs, April 08, 2021, https://jia.sipa.columbia.edu/online-articles/pandemic%E2%80%99s-unprecedented-shock-and-opportunity-caribbean, Accessed on 01 November 2021.
[iv]Krishna Srinivasan, Sònia Muñoz, and Ding Ding, “How the Caribbean Can Avoid Becoming a COVID-19 Long-Hauler,”IMF March 21, 2021, https://www.imf.org/en/News/Articles/2021/03/11/na031221-how-the-caribbean-can-avoid-becoming-a-covid-19-long-hauler, Accessed on 01 November 2021.
[v]PAHO, “PAHO Director Appeals to Caribbean People To Get Vaccinated, Observe Protective Measures,” https://www.paho.org/en/news/11-8-2021-paho-director-appeals-caribbean-people-get-vaccinated-observe-protective-measuresAccessed on 10 November 2021.
[vi]UN ECLAC, “Reckoning With Covid-19: Pursuing A People Centered Recovery And More Resilient Future For The Caribbean,” Twentieth meeting of the Monitoring Committee of the Caribbean Development and Cooperation Committee of the Economic Commission for Latin America and the Caribbean,https://www.cepal.org/sites/default/files/events/files/20_mccdcc_ddr1_-_conference_document_2_nov_2021_0.pdf, 05 Nov. 2021, Accessed on 11 November 2021.
[vii] PAHO, “PAHO will begin procuring COVID-19 vaccines to expand access in Latin America and the Caribbean,” https://www.paho.org/en/news/11-8-2021-paho-will-begin-procuring-covid-19-vaccines-expand-access-latin-america-andAccessed on 10 November 2021.
[viii]Henry Mooney, “The Pandemic’s Unprecedented Shock and Opportunity for the Caribbean,” Colombia Journal of International Affairs, April 08, 2021, https://jia.sipa.columbia.edu/online-articles/pandemic%E2%80%99s-unprecedented-shock-and-opportunity-caribbean, Accessed on 01 Noember. 2021.
[ix] The World Banks, “Recovering Growth Rebuilding Dynamic Post-COVID-19 Economies Amid Fiscal Constraints,” October 2021, https://openknowledge.worldbank.org/bitstream/handle/10986/36331/9781464818066.pdf?sequence=11&isAllowed=y, Accessed on 16 November 2021.
[x]Resiere, D., Mehdaoui, H., Dyer, H. et al. “Covid-19 in the Caribbean: Lessons Learned from the Ongoing International Medical and Scientific Cooperation”, Global Health 17, 55 (2021). https://doi.org/10.1186/s12992-021-00706-3, Accessed on 25 October 2021.
[xi] UN ECLAC, “Financing for development in the era of COVID-19 and beyond Priorities of Latin America and the Caribbean in relation to the financing for development global policy agenda,” 11 March 2021, https://repositorio.cepal.org/bitstream/handle/11362/46711/1/S2100063_en.pdf, Accessed on 16 November 2021.
[xii] Ratna Sahay, Ulric Eriksson von Allmen, Amina Lahreche, Purva Khera, Sumiko Ogawa, Majid Bazarbash, and Kim Beaton, “The Promise of Fintech Financial Inclusion in the Post COVID-19 Era,” IMF 2020, file:///C:/Users/Lenovo/Downloads/PFFIEA.pdf, Accessed on 16 November 2021.
[xiii] The World Banks, “Recovering Growth Rebuilding Dynamic Post-COVID-19 Economies Amid Fiscal Constraints,” October 2021, https://openknowledge.worldbank.org/bitstream/handle/10986/36331/9781464818066.pdf?sequence=11&isAllowed=y, Accessed on 16 November 2021.