NASSAU, BAHAMAS — While the fall-out from COVID-19 has crippled the country’s tourism sector, a local economist says that the industry is still the Bahamas’ primary economic driver amid despite increasing calls for economic ‘diversification’.
Rupert Pinder while addressing the Rotary Club of West Nassau yesterday many persons may not fully understand what it would mean for a small open economy like the Bahamas to diversify.
“In my view tourism is still the main driver of this economy. I will not minimize the issue of food security but while diversification sounds sexy I don’t think many people fully understand what it means for a small open economy like ours to diversify,” said Pinder.
Pinder suggested that the country’s tourism sector itself, which prior to the fall-out from the COVID-19 pandemic had long been the biggest economic driver needs more diversification. He suggested that instead of mega resorts, this nation should look to develop more smaller boutique outfits particularly in the family islands as well as enhance the Airbnb offering.
“Each island has the ability offer a slightly different product,” said Pinder.
He continued: “Now I am not saying that we shouldn’t promote agriculture where it is practical and makes good economic sense. Tourism is still a very big business globally. It will be interesting to see what shape it takes after COVID-19 but the Bahamas is still much conducive to tourism.”
Pinder again warned that tough decisions lay ahead for the government amid the ongoing fall-out from the pandemic, as he reiterated, “We cannot save everybody”.
Pinder estimated that the on the present trajectory, the country’s foreign currency debt could hit roughly $4 billion.
He noted that the country’s foreign currency reserves will will heavily influence what steps the government will take to offset the COVID-19 fall-out.
“You have to do as much as you can to preserve the 1.1 parity between US and Bahamian dollar. That would certainly come under threat if you decide to do something very foolish pumping a lot of Bahamian dollars in the economy in the absence of having foreign currency coming in,” he said.
According to Pinder unemployment in the Bahamas could reach as high as 40 per cent.
Pinder noted that the crisis is “changing a whole lot of dynamics” and suggested that the Bahamas look at ways to increase broadband penetration, digital presence and incentivize e-commerce.