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THURSDAY, AUGUST 27, 2020
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Moody’s: GDP down by a fifth
By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
M
OODY’S expects a 22 percent contraction in GDP in 2020, citing high unemployment and a near tourism collapse in 2020. The rating agency, in their annual credit analysis of The Bahamas, said, “Tourism flow losses were almost 100 percent in the second quarter of 2020 and we expect this will remain
the case during the third quarter. Unemployment levels are also expected to rise significantly (some official estimates put the rate at 30 percent of the labour force), weighing on household consumption. This will contribute to a contraction in real GDP in the range of 17 percent to 22 percent in 2020.” Moody’s did say, however: “For 2021, we expect a recovery in US economic growth to over two percent, which, coupled with the fact
that unlike natural disasters the coronavirus does not destroy installed capacity, should help tourism flows recover to 60 percent to 70 percent of their 2019 levels. While this would support an expansion in GDP of over ten percent next year, there are still material risks to the overall recovery of the tourism sector.” Moody’s warned again that structural impediments to growth like global competitiveness costs, noting particularly The Bahamas
scoring poorly on the World Bank’s ease of doing business ranking on the categories of registering property, trading across borders and obtaining credit, noting that: “Even though the Free National Movement government, which took office in May 2017, established an Ease of Doing Business Committee in 2017, the country’s overall ranking only improved by one place in the 2019 report compared to the previous year.”
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Jitney drivers ask ‘what about us?’ By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net JITNEY drivers are “totally irate” and “sorely displeased” after being left out of the latest emergency powers orders that allowed for commercial activity to resume on August 31. Harrison Moxey, the United Public Transportation Company’s (UPTC) president, told Tribune Business yesterday that his members are “totally irate” about not being able to restart the bussing system on August 31. He also said: “We are going to have something to say about that, but we are sorely displeased about it.” Mr Moxey added: “If you are going to open up the businesses then people need to get to work, we need to
get back to work and at the same time we are not hearing anything about any stimulus or any relief package for any of us and we have been suffering now for six months.” “We have had it up to the sky with it,” said Mr Moxey. Jitneys were allowed to resume operations on July 1, after having been shut down since the end of March, only to be shut down again in early August with no indication as to when they will resume operations. Mr Moxey said about the length of time his members have been out of business: “We’re planning to do something for today, we are sorely displeased about this. We don’t feel as if we are being considered, we don’t feel as if we are being respected and we are just being pushed aside and we
Sharp rise in households with income below minimum wage By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net THE number of households reporting an income below the minimum wage in April nearly trebled, according to an Inter-American Development Bank (IADB) report. The report, titled “COVID-19-The Caribbean Crisis”, said that 72.5 percent of households out of 910 surveyed said that they had reported income loss in April and the percentage of households that reported income below the minimum wage increased by 195.6 percent from 16.1 percent to 47.6 percent.
There are three main factors that contributed to this increase, the bank said. The first was significant business closure, either by force from the competent authority or due to lack of demand. Secondly, out of those surveyed, 75.1 percent indicated at least one job loss in their household. Lastly, people reported they had stopped receiving rent payments from real estate or vehicles. The report also said the loss of employment impacted 80.6 percent of low income households, or households that reported earnings below the minimum wage as of January.
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700 Wines & Spirits brings back curbside By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net A MAJOR retail liquor store chain will be ready to operate curbside as commercial activity restarts on August 31. 700 Wines & Spirits told Tribune Business: “In accordance with the latest Emergency Powers (COVID-19 Pandemic) (No.4) Orders, 2020, CBL’s retail operation - 700 Wines & Spirits - will reopen for business on Monday, August 31, 2020. 700 Wines & Spirits will offer curbside
service at most of its locations in New Providence. Additionally, customers also having the option of utilising our online platform to make purchases.” Liquor stores were not allowed to operate under the original emergency powers order in March, leaving several liquor merchants wondering about when they will be allowed to resume operations. To advertise in The Tribune, contact 502-2394
are totally flat on our faces suffering through the whole ordeal.” The emergency powers, COVID pandemic No 4, dated October, 2020, state that no person shall offer or seek to hire any private or public bus services. Taxi drivers, however, may operate under the guidelines issued by the ministry of tourism and approved by the ministry of health. Mr Moxey added: “We hoped that by this time consideration would have been given to us in transportation. We have invested to make all of the necessary requirements for the government with the protocols established for public transportation and here it is the competent authority is opening again and we have no idea as to when we are actually going to be able to
begin operations and there is no kind of relief for us at this time. “We are at our wits end and nobody seems to care about it. People need to get to work and now they are going to be hacking and trying to hitch-hike and nobody is picking you up alongside the road because of the COVID-19 fear. This does not make any sense to us in the way that this is being done and we are sore displeased about it,’ Mr Moxey said. Rudolph Taylor, the Bahamas Unified Bus Drivers Union’s (BUDU) president, said: “Everybody is just hopeful that they can go back on the road. No indication as yet from the government on when we can go back to work, but
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Two-year risk to nation’s credit By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
DOWNSIDE risk to the country’s credit profile will remain for the next two years, ratings agency Moody’s warns as it keeps the country’s sovereign credit rating to “Ba2” with a negative outlook. The rating agency, in their annual credit analysis of The Bahamas, said that given the severity of the COVID-19 crisis they expect downside risks to the credit profile to remain over the next two years. Moody’s added: “The Bahamas credit profile incorporates moderate economic strength, reflecting its subdued economic performance, high wealth levels and moderate institutional strength, which underpins confidence in the currency peg and overall macroeconomic stability. Two shocks, Hurricane Dorian in 2019 and the coronavirus outbreak this year, will weigh significantly on economic growth and lead to higher debt and interest burdens. This will test the government’s progress in strengthening its fiscal policy framework. “There is still significant uncertainty about the strength and speed of the global tourism sector’s recovery. If the recovery in 2021 ends up weaker than what we currently expect, it would place additional pressure on government revenue and further erode the sovereign’s fiscal strength. Prospects for debt stabilization are also highly dependent on economic performance in 2021 and 2022. Moreover, if market sentiment towards The Bahamas does not improve, it could weigh on the government’s ability to finance its larger funding needs through 2021/22. While the favorable
maturity profile of government debt mitigates some risks related to government liquidity (the next global bond is not due until 2024), limited market access could create external liquidity pressures.” Moody’s added that given the negative outlook a rating upgrade is “unlikely”. However, the outlook could be changed to stable if “the government successfully finances its larger borrowing requirements for fiscal 2020/21, and if tourism recovers, supporting growth and budgetary revenue. Implementation of fiscal and economic policies that support fiscal consolidation and stabilise the debt burden over the coming years would also be credit positive”. Further compounding this, Moody’s warned that negative credit pressure could emerge if the government runs into “heightened liquidity pressures”, that would limit its ability to fund larger fiscal deficits over the next two years that would cause more material decline on the foreign reserves. Moody’s also said: “Nearterm economic prospects, already buffeted by the impact of Dorian on Grand Bahama and the Abacos, are further weighed down by the impact of the coronavirus crisis. In addition border closures and quarantine measures imposed to contain the spread of the disease, major hotels, including Atlantis and Baha Mar, closed their doors in March.” The borders were opened to international travel in July, but were quickly closed again due to the increase in COVID-19 cases Moody’s said, along with the lack of demand the two largest hotels in the country BahaMar and Atlantis, delayed their openings until
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