Tourism fallout - Sector forecast to shed J$76 billion as coronavirus causes plunge in revenue projections
The tourism sector, Jamaica’s second-largest earner of foreign exchange, is expected to haemorrhage approximately J$76 billion as government officials cut the forecast for the 2020-2021 fiscal year owing to the severe impact of the dreaded coronavirus, or COVID-19, on travel around the world.
Tourism was initially projected to earn US$4.25 billion (J$578 billion) for the upcoming fiscal year. However, the sum has now been reduced to US$3.69 billion (J$502 billion) by the Ministry of Tourism.
Edmund Bartlett, the portfolio minister, revealed that the sector was currently growing at a rate of 5.2 per cent since the start of the year. However, the minister told his parliamentary colleagues at yesterday’s sitting of the Standing Finance Committee that he had to revise the projected out-turn to 1.1 per cent when compared with the previous year.
The Organisation for Economic Cooperation and Development, in its interim report for March 2020, warned that the global economy could see its slowest growth rate since the meltdown in 2008.
The international think tank has projected growth of 2.4 per cent in 2020, down from 2.9 per cent in November 2019. The organisation indicated that if the impact of COVID-19 is prolonged, the global growth forecast could further dip to 1.5 per cent.
Bartlett said that he was conscious of the “prevailing winds that are blowing” and was even more conscious of “further headwinds that might impact bookings and aviation activity”.
Visitor arrivals for the year have been adjusted to 4.3 million people – down from 4.6 million that was first projected. Stopover arrivals have been trimmed from 2.9 million to 2.7 million, while cruise arrivals have been adjusted slightly from 1.6 million to 1.5 million.
“The budget this year reflects overall the intention to enable growth, but this new projection will achieve a flat rate of growth of 1.1 per cent over last year,” Bartlett said.
He noted that tourism bookings have ceased from Italy, while there was a softening of the market in Germany and France. However, he explained that Canada, the United States, the United Kingdom, and South America were holding at this point.
“My take on it is that there is going to be some softening; we are watching to see how March operates particularly with spring break and carnival.”
At the same time, Bartlett said that he would be meeting with players from the cruise lines on Friday. This apparently comes against the background of a warning from Carnival Cruise Limited that it would bypass Jamaica if the Government failed to soften its stance on safeguards against COVID-19.
The Gleaner reported on Tuesday that the country had already lost ship calls in the wake of the “stand-off” over protocols between Carnival and the Ministry of Health & Wellness.
Dr Nigel Clarke, the minister of finance and the public service, yesterday also responded to questions on the likely impact of COVID-19 on Jamaica’s economy.
He said that at the time the J$853-billion Budget was prepared, the full extent of the global health crisis was not fully manifested.
However, he told committee members that there were small contingencies in the Budget to respond to any eventuality. He did not disclose that amount.
Clarke said that the Government was paying very close attention to the issue and is in dialogue with the ministries that could be affected.
Yesterday, Prime Minister Andrew Holness also sought to assure Jamaicans that the public health system was prepared if any coronavirus cases emerged here.
“If the unwanted happens, we have put in place all the measures we can, including alerting the Ministry of Finance of a possible budgetary spend where that may become necessary, so that we don’t only have our resources that exist, but put additional resources,” he said, while speaking at a groundbreaking ceremony for the Port Royal Street Coastal Revetment Project at Breezy Castle Sports Centre in downtown Kingston.
“On Thursday, I will be meeting with the National Disaster Committee that I chair, that brings together all the stakeholders for a national disaster response, and then we will create from that a subcommittee that will do day-to-day management of any eventuality that may occur,” Holness added.