COVID-19 Webinars: Supporting Businesses in a Time of Crisis | Webinar #6

The Economic Impact of COVID-19 on the Cayman Islands Paul Byles, Director, FTS Chamber of Commerce Webinar May 6th 2020

Topics § Chamber of Commerce Objective § Approach to the Study § Impact on Economy § Impact on Jobs § The Vulnerable in our society § Chamber Business Survey Results

Historical Reflection How did Mr. Ivan differ from Ms. COVID? Hurricane Ivan

COVID-19

Physical destruction, & related mental impact

No physical, only mental

Lasted around 50 hours

Will likely last for at least 6 months

Felt life threatening over a 30 hour period

Felt life threatening for 6 weeks, and more for some persons.

Historical Reflection How did Mr. Ivan differ from Ms. COVID? Hurricane Ivan

COVID-19

Airport closed for approx. 4 days

Borders closed for many months

We could all go back to work as long as the workplace was in good physical condition

We are not allowed to work and must stay mostly at home even though the workplace is in perfect condition.

Estimated 2.8 billion damage

Uncertain, but will likely occur for a few years

Total Destruction VS ‘Emptiness’

Photo credit: Cayman Compass

Why do a Study? § Unprecedented event – very different to a major hurricane, so we need to better understand what we are facing. § Negative impact obvious, but in what areas? And by how much?

Why do a Study? § How can we offer solutions if we don’t understand where the challenges are and who has been impacted? § Planning for the new normal. What can we learn from the impact to help us recover and be more resilient in the future?

Approach to the Study ยง Examine official data (Economics & Statistics Office) ยง Surveyed local businesses ยง Use standard economic theory and understanding of Cayman economy to estimate the impact

Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities.

Likely to close in 1-4 weeks 7 6

6 5

5

5 4

4 3 2 1 0

0 Financial Services

Tourism

Restaurant

Construction

The 20 businesses likely to close are all from the tourism, 'other', construction and restaurant sectors.

0

0

ICT

Healthcare

Other

Sector View: Are Caymanians jobs at risk of being laid off?

Other

81%

Tourism Restaurant

79%

Key Difference - ML V TF:

73%

Construction ICT Healthcare Financial Services

70%

§TF uses legitimate funds as well as illegal 43% §Primary purpose of laundering is to 25% DISGUISE funding sources.

20% not always ‘obvious’ to detect §Implication: 0%

10%

20%

30%

40%

50%

60%

70%

80%

A very large percentage of the 'other' tourism, restaurant and construction sectors report that Caymanian or PR jobs are at risk. But only 20% of financial services firms & 25% of healthcare firms report a risk of Caymanians or PR losing their jobs.

90%

Sector View: Are Work Permit Holders' jobs at risk of being laid off?

Other

94%

Tourism

77%

Restaurant

73%

Construction

70%

ICT

43%

Healthcare

25%

Financial Services

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

A very large percentage of the 'other', tourism, restaurant and construction sectors report that Work Permit Holders's jobs are at risk. But only 20% of financial services firms and 25% of healthcare firms report a risk of those workers losing their jobs.

What have we learnt? And where do we go from here? ยง While we will always import most of our food, we can do more for local food production. ยง Increased ability of local business to sell products and services online is not only efficient for doing business but very valuable in certain types of crisis such as this one.

What have we learnt? And where do we go from here? ยง Our domestic economy is very reliant on international markets for both tourism and financial services. Can we do anything to diversify? ยง How can our national disaster response plan be improved after this experience? ยง What impact will this have on our pensions?

Q&A