When will the Caribbean region rebound from the pandemic?

The war against the pandemic is far from over for the Caribbean region. In these challenging times, the pandemic has revealed many frailties in the region, but as we live through COVID-19, we are constantly learning to adapt and evolve.

While we do have limited access to vaccines in the region, there is still an enormous amount of work needed to transition us out from the pandemic effects. As we look towards the future, it is imperative that we simultaneously improve the health of our people and the health of our economies.

The pandemic, while it devastatingly halted some industries, it did provide the stimulus needed for the emergence of innovation in others. One of these ways forward is the accelerated shift towards digital banking. With the introduction of lockdowns and limits on in-person service, banks were forced to quickly adapt for an increased volume of online services. At Republic Bank, we have been promoting digital channels long before the pandemic, but the crisis has propelled the emergence of digital platforms even further. For example, our Corporate Internet Banking users grew by 35% from September 2020 to September 2021, while our active Internet Banking and Mobile App customer users grew by 40% and 76% respectively from June 2019 to June 2021 respectively.

With regards to new product offerings for our corporate and personal customers, in June 2020 we lunched Epay – which enables companies to accept online payments without having a website. In March this year, we introduced Endcash to our extensive array of electronic services where in only 8 months we saw solid growth of users downloading this platform.

It goes to show that despite our challenges, as a people we are resilient. And we must use this creativity to persist beyond pre-pandemic levels. Innovation in the banking sector has proved its value to society as it enabled completely contactless banking in times of physical distancing, and it offered employees the possibility to work remotely.

As we set our sights to emerge from the crisis and step foot towards recovery, some may argue that herd immunity might be the kick-start we need for a brighter economic outlook. According to epidemiologists, at least 60%-80% of the population must develop antibodies as a pre-requisite to curb the spread of the virus. At the time of this writing, the percentage of people vaccinated in Trinidad and Tobago is 42.1%; 30.3% in Guyana; in St. Lucia, 20.7%; while in Barbados and Jamaica has 42.4% and 12.3% respectively. Against the standard belief for herd immunity, we can see that the region is still some way off the benchmark.

However, economists at Morgan Stanley believes that herd immunity is not necessarily a precursor for economic normalcy. According to them, China and Taiwan are experiencing low levels of vaccinations and immunity but China’s economy rebounded to its pre-pandemic size in the third quarter of 2020, and Taiwan’s economic growth rate didn’t seem to be affected by COVID-19 at all.

The Asian examples above can lead one to perceive that herd immunity is only a factor to control the health impact of COVID-19 and not as an impetus for economic growth. As such, our question should not be whether we will exit this pandemic, because we will, but whether we have the strength and resources to push ahead.

An unwanted characteristic that plagues the Caribbean economies is a high debt to GDP ratio, averaging at 68.5% of GDP in 2019. This therefore leaves governments across the region with the challenge to reduce debt while simultaneously discovering unique ways to stimulate growth. Each country must now decide on what is important to best drive their immediate to long-term economic recovery.

While there are opportunities for the economies of the region to rebound, the outlook for the remainder of year is uncertain. Hope that the health disruption could end will lie on a successful vaccine rollout, but the region has been slow in vaccine uptake. Thus, herd immunity may not be attained before the end of 2021. Even with the push towards a 60%-80% vaccination rate, there is always the threat of new waves of infection which can hamper any progress as new variants of the virus emerge. The policy choices that governments make today will determine their success in building a better, more resilient tomorrow. It is an opportunity to chart a path that empowers everyone to face the future with confidence.