More months of high unemployment will lead to depression, notes CFAL

Should the country’s unemployment numbers remain higher than 20 percent for several more months, the country will “be in the throes of a depression”, CFAL’s Local Economic Review for the third quarter of 2020 explained, adding that because The Bahamas does not have the resources for extensive stimulus schemes, it has to administer social assistance schemes wisely.

The review also insisted government produce a report on how borrowed money is being spent, along with a fiscal policy plan to counter the economic slump caused by the COVID-19 pandemic. It called the country’s economic outlook “grim at best”.

The government has yet to release the Fiscal Strategy Report it was mandated to present to Parliament last month.

Meantime, CFAL contended in its review that with a jobless rate near 50 percent, the country is in a job crisis.

“While it may be premature to classify our current economic state as a depression, if the unemployment rate persists above 20 percent for several more months, The Bahamas will in fact be in the throes of a depression,” the CFAL document states.

CFAL notes in its review that the government’s budget was challenged before the COVID-19 pandemic. It cautioned that policymakers have to balance social support for out-of-work citizens and closed businesses, with its “investments and policies that deliver economic growth and development”.

“In addition to the massive strain on the public healthcare system, the country’s gross domestic product has significantly contracted, unemployment has escalated and an increase in government borrowing and deficits has led to the further deterioration of public sector finances,” the CFAL report states.

“Many of these issues are structural and have only intensified following the COVID-19 pandemic. To aid households and businesses during this time, the government has had to borrow a significant amount of funds. While this approach is supported, eventually the government will have to reduce these stimulus measures to prevent the country from drowning in unsustainable debt.”

According to CFAL, industries like fishing and agriculture should be expanded to diversify the Bahamian economy and improve domestic and foreign earnings.

The report notes that the country “faces a long road to sustainable economic growth” and will require the participation of policymakers, corporate partners and citizens to emerge from the COVID-19 pandemic in a better position.

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