Central Bank: COVID-19 economic recovery to take two years

Central Bank: COVID-19 economic recovery to take two years
Central Bank Governor John Rolle.

NASSAU, BAHAMAS — The Bahamian economy will not fully recover from the COVID-19 fall-out until 2022 according to Central Bank Governor John Rolle, who also noted that the economy is expected to contract at a rate that exceeds eight percent.

Rolle was giving a presentation on monthly economic and financial developments for March 2020.

He noted that presuming a vaccine is available for COVID-19 and recovery begins at a gingerly pace in the near term, full recovery will likely be 2022.

“We expect in 2021 economic activity to be higher but not on the level to completely erase all of the losses we have incurred this year,” said Rolle.

Rolle noted that it took this nation a decade to recover from the great recession of 2008 however it is not anticipated that COVID-19 recovery will take that long.

However, he said that in this instance the extent of interim hardship is exceedingly greater.

Rolle added however that this nation is equipped and prepared to endure the necessary sacrifices to ensure that “we come through this in one piece”.

He further noted that net tourism inflows, along with continuing reinsurance receipts, boosted external reserves to a seasonal peak, just above $2 billion, where balances still hover.

“Taking this approach, the Central Bank has targeted a reduction in the foreign reserves, potentially exceeding $1 billion,” he said.

“This would place balances in the $800 million to $1 billion range by the end of 2020, still leaving adequate support in place to uphold.

“We are presently still at a level of just around $2 billion because from the start of the lockdown to the present there has been a suppressed level of spending.”

Rolle said: “We do anticipate that as businesses start to operate and replenish inventories the reserves will begin to see some reduction. There is no immediate concern over the level of reserves but that is qualified by saying we look at the levels relative to the tools that we have to manage foreign exchange.”