Latin America is the hardest-hit region in the world by COVID-19, both in terms of health and economic impact. Several LAC countries are among the ones with the highest number of COVID-19 cases relative to their population. However, the Caribbean, particularly though not only the Eastern Caribbean, is a subregion with a relatively small number of cases to date: a total of 1800 in Jamaica, 165 in Barbados, and 760 in Belize. In Jamaica, there are 60 cases per 100,000 people.
The contention of the health impact has not come without cost. Governments across the sub-region have been forced to impose strict measures of quarantines, lockdowns, and closure of borders. For Caribbean countries, which rely strongly on tourism, the economic consequences of these measures are proving to be extremely severe, and the outlook for recovery dire.
In Antigua and Barbuda, tourism accounts for 54% of GDP; 42% in Belize; 41% in Barbados; 38% in Dominica and 34% in Jamaica. In terms of total employment, the story is similar: 48% of the employed in Antigua and Barbuda work in tourism-related activities; 41% in Barbados, and 31% in Jamaica.
Other countries in the region are also affected by the decline of tourism. In Mexico for example, the tourism sector represents 17% of total GDP, it is the main economic activity in many regions in the country, and an employer of over 5 million people. Similarly, tourism represents 15% of GDP in Panama and Honduras and 13% in Costa Rica.
As figure 1 shows, while the region has suffered episodes of pandemics before, none significantly affected the tourism industry. The SARS outbreak only slowed the growth of tourism in Antigua and Barbuda and St. Vincent and the Grenadines. The H1N1 outbreak came right after the financial crisis of 2008 and thus the empirical association presents obvious attribution problems. The Ebola and then the Zika outbreaks do not seem to have had any effect whatsoever.
This time, however, is different. The global scale of the COVID-19 crisis and mobility restrictions imposed to control it are not only affecting people’s ability and appetite to travel around the world but also their disposable income to pay for it. Some countries in the Caribbean are requiring (negative) PCR tests for visitors to both reassure tourists that it is safe to visit and keep the pandemic under control. Others are not establishing the 15-day quarantine as mandatory. Countries like Bahamas and Barbados are issuing one-year working permits for people to work remotely. However, these measures are not filling the gap yet.
As of today, air traffic is close to 15% of pre-COVID levels in the main airports of Jamaica, Dominican Republic, and Barbados. Data shows that air flight departures fell dramatically by mid-March (studying arrivals would make more sense but data are not available). While a shy increase is observed in Jamaica after reopening borders to foreign travelers on June 15, it is still far from a full recovery. The cruise industry -for which the Caribbean is receptor to 38% of the total number of passengers- has also plummeted.
In the short run, countries in the region will need to continue to innovate implementing safety protocols and incentives to attract those who are willing and able to travel. The sharing of best practices and the creation of a free travel zone amongst countries with similar safety protocols in the region could help. In the long run, however, this pandemic alerts on the importance of diversifying income sources for countries to build resilience to shocks.