Coronavirus and our economy’s pre-existing conditions

3D illustration of Coronavirus, virus which causes SARS and MERS, Middle East Respiratory Syndrome
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By George-Ann Ryan

As the COVID-19 virus travels throughout the world, it not only lays bare our vulnerabilities as humans but also exposes the vulnerabilities of our nation-states. As we grapple with the virus’s effects on many of Antigua and Barbuda’s already fragile public health and economic institutions, one thing, has become clear: our over-dependence on tourism will lengthen the time that our economy will take to recover. 

United States nationals are the largest source of tourism for Antigua and Barbuda with nearly 40% of air arrivals in 2018. However, the U.S. economy has been all but brought to its knees as many of its own deficiencies in economic and labour policy (such as a lack of federally mandated sick leave for workers and decimated social welfare policy) had left many members of the population on the front lines of the pandemic.

As people stay inside, levels of consumption plummet, and the uncertainty around how to proceed in the post-Coronavirus economy looms over Western nations and countries such as the United States experience record numbers of joblessness. The last  two weeks of March, alone, saw over 10 million Americans to lose their jobs and file for unemployment insurance. The Federal Reserve has since projected that a record 47 million individuals could lose their jobs in a COVID-19 fuelled depression translating to an unemployment rate of over 32%. This is only the beginning as retailers great and small shut their doors and the number of cases exponentially rises both in the United States and abroad.

Normalcy is out of the question once the virus has run its course. Consumer confidence and household incomes will surely not return overnight or even in a year’s time. Looking back to our last global economic upheaval, the United States took over five years to recover from the 2008 recession with respect to the median family income and unemployment. Even more significant, familial wealth has yet to return to pre-recession levels. The same can be said for Western Europe which experienced the Sovereign Debt Crisis that ravaged their economies further.  Reflecting these trends, it took over five years for Antiguan and Barbudan tourism numbers to return to pre-recession levels. 

The nature of Coronavirus and its spread means that tourism-dependent nations will be hardest hit. At least three regional airlines in the United States and the United Kingdom have filed for bankruptcy citing COVID-19 related decreases in the demand for travel as a factor.[1] [GR2]  Airlines such as American Airlines and Virgin Atlantic, which shuttle large swaths of tourist arrivals to Antigua and Barbuda each year, have admitted that they are in somewhat of a danger zone with the tourism industry poised to take a minimum of 10 months to recover from the pandemic.

World Tourism Council data shows that Antigua and Barbuda has the tenth-highest dependency on tourism in the world and the fifth-highest dependency in CARICOM with tourism activity making up just over half of Antigua and Barbuda’s GDP and employing one in eight members of the labour force. Our dependency on tourism has, no doubt,  drastically declined from the 90s where tourism contributed to over four-fifths of our economic productivity. However, at over double the world median, our ratio of tourism revenue receipts to GDP still indicate a trend that is unsustainable.

Tourism should not be eradicated but it should be leveraged. The industry brings in foreign currency, provides jobs and, utilizes Antigua and Barbuda’s competitive advantage as a nation — sun, sea, and sand. However, income from this industry should be used wisely and policies should veer toward long-term cultural and economic development such as the revitalization of our many historical sites — some of which are in dire need of rehabilitation — and apolitical investments in supporting entrepreneurs whose ideas can help us transition into a more sustainable economy with jobs in a variety of sectors and levels.

Citizenship by investment and loans and grants from the People’s Republic of China are quick injections but not a panacea for the structural deficiencies that ail our economy now and in the future. A stable diversified economy strong enough to welcome back our graduates abroad so that they can use their skills wisely, support strong political and economic institutions, promote equality and mobility, and create a resilient economy will take far beyond five or ten years to develop. Evidence-based policies for our own self-sufficiency are the answer. If we do not learn it now, then we may never.

(George-Ann Ryan is an economics and public policy analyst. She holds a Master of International Affairs degree from Columbia University’s School of International Affairs concentrating in Economics and Data Science and a Bachelor of Arts in Economics and French from Pace University, NYC.)

Excellent point


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