First Look- Potential Economic Impact of COVID-19 on Belize


The growing threat of the global pandemic triggered by COVID-19, will be disruptive for citizens and visitors alike, but as with all similar events it will pass. The greater longer-term impact on Belize will be affected if there is a global economic slowdown and how long it lasts.
As Belizeans prepare to weather the storm of COVID 19, after the announcement of the first case on Monday March 23, by Prime Minister, Rt. Hon. Dean Barrow, it is important to take a retrospective look on the proactive mitigation initiatives that had been put in place, in order to face the ‘when not if’, scenario. At the first press conference by the Prime Minister and subsequent press conference by the Prime Minister and Leader of the Opposition, it primarily displays that in order for us to combat COVID-19, it is imperative that it is manifested by unity of purpose which is to ensure the health and wellness of the Belizean people, while maintaining some parallel level of resilience.
Of course, we must take a look at the cost of such protection because every measure that has been implemented will have direct and indirect economic costs. For example, just the initial mitigation cost, was an allocation of some $900,000.00 and we must note that this allocation comes towards the end of the 2019-2020 fiscal year.
Belize, is one of those Caribbean countries that is very dependent on tourism and tourism contributes some 40% to our Gross Domestic Product (GDP) and therefore, it means that any negative shocks would immediately trigger a downturn in our number one export industry, as a value chain of economic activities would decline. There was a loss from cruise arrivals; cancellation at hotel accommodations; reduction in revenue and loss of employment to those who depend on tourism for their survival. Imagine your revenue is $1.00 and total operational cost is $.60 but then revenue declines below that $.60, how then is operational cost met or how can it be sustained, unless it comes from potential bailouts from the Government.
Some Belizeans were calling for an immediate lockdown of our country but that would have been foolhardy, without a clearly defined strategy. We have been very proactive and therefore, being at the front of this situation and the unwavering initiatives by our health services, led by Dr. Marvin Manzanero, Director of Health Services, must be applauded because these vigilant measures at all ports of entry prevented the when; at this time, there is still only one confirmed case in Belize.
The closure of our borders mean that tourist arrivals is now very much close to zero; hotels have been closed; employees have been laid off in many cases. The buses are taking stricter measures and there are disruptions to schedule. All of these actions create immediate revenue leakage to the macroeconomy.
If as the World Health Organization (WHO) experts now predict, it cannot be contained, it is likely that COVID-19 will cause a shock to global economic growth. Because tourism benefits from the confidence that a vibrant world economy creates, even if the virus has minimal infection in the region, it will have negative economic implications on Belize because of its high dependence on its visitors’ willingness to travel.
The indications are that cruise and air travel are already being hit globally as new centers of infection emerge in Europe, North and South America, the Far East and elsewhere. There is also evidence that business travel is being postponed and hotel cancellations are surging in infected areas of Europe.
Responding will require leadership, timely and accurate information, close coordination at a national regional and international level, and collaboration, if the region is to protect both its citizens and the tourism economy. The sector will require a well prepared and measured response, and the need for multisectoral coordination between the health and tourism authorities.
Away from tourism, there are already indications that global supply chains are being disrupted, industries are having to temporarily layoff staff, and companies must brace for a decline in profits. More generally, the IMF has cautioned that a slowing of global growth is now likely in 2020.
Recent experience suggests that Belize has an extraordinary resilience and ability to bounce back from a variety of crises. In recent years, we have demonstrated our ability to recover from economic downturns, hurricanes, climate change related phenomena such as sargassum and beach erosion, and potential reputational damage on social media caused by crime and visitor related incidents.
While it is too early to fully grasp the impact of the virus, the challenge will be to return in the shortest possible time to normality, growth and development. In this respect, for tourism at least, Belize’s response to the COVID-19 pandemic must be resilient, innovative, competitive and sustainable, because whenever the world adjusts and returns to some level of normalcy, the world as we knew it, will not be the same.
The threat of a COVID-19 global pandemic is immediate and must be taken seriously. It is disruptive for Belizeans and visitors in the short term, but as with all similar events, it will pass but we must be prepared to mitigate the long term effects. Unfortunately, more telling may be the longer-term economic impact of a global slowdown on what had promised to be an economically positive year for the Caribbean, including Belize. Recovery from the global economic impact of COVID-19, will require each of us to understand the new normal and that the inconveniences and cost must be borne by all of us.