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Troubling times ahead for Cayman’s economy, says Finance minister

Despite ending 2019 with growth of around three per cent per annum, Cayman’s Finance Minister, Roy McTaggart, said the country’s economy will contract sharply, with unemployment expected to rise above 10 per cent. And that’s in a best case scenario.

Unemployment in the Cayman Islands will rise double digits, even in a best case scenario, says Finance Minister Roy McTaggart

McTaggart said COVID-19 has turned the world has turned on its head, 

Warning of an economic situation that saw the country use US$38 million of its cash reserves last month alone.

McTaggart said the island is looking to secure a standby line of credit in the amount of US$500 million in the event that the country exhausts its reserves.

“It is really disheartening for me to have to say that but it is a stark reality of what we are likely to face moving forward.”

Finance Minister Roy McTaggart

“But still our government will continue to tell you the unvarnished truth,” added McTaggart.

He said the number of displaced jobs is estimated at 8,859 which would translate into an unemployment rate of 18.7 per cent of which 2,772 would be Caymanian jobs.

“In the best-case scenario considered by the ESO, the local economy would be reopened by the beginning of July 2020. This scenario also assumed that visitors to these islands would begin to arrive in October of this year, although in small numbers.

“Under this scenario, GDP is projected to contract by 11.4 per cent with the employment rate rising to 11.6 per cent. The number of displaced jobs is estimated at 8,859 for an unemployment rate of 18.7 per cent of which 2,772 would be Caymanian jobs,” added McTaggart.

IGross domestic product could contract 12.2 per cent with the unemployment rate rising to 12.3 per cent. (Photo: The Guardian)

Scenarios are conditioned on the gradual return of visitors to Cayman shores at a rate of 20 per cent of normal levels that would usually be seen in the high tourism season, he said.

In a worst-case scenario, which would be a reality if international developments prevented the return of tourists for 2020, the country would see a further uptick in unemployment.

In that scenario, gross domestic product is projected to contract 12.2 per cent with the unemployment rate rising to 12.3 per cent.

For Caymanians this number would be higher, McTaggart said noting that Caymanian unemployment was expected to increase by up to 19.7 per cent or 2,981 persons – a total job loss of 9,582 or 12.3 per cent would be displaced.

Further, McTaggart shared the International Monetary Fund’s (IMF), April 2020 World Economic Outlook, which projects that the region will contract by 5.2 per cent, with Aruba projected to show the largest contraction with a GDP decline of 13.7 per cent.

–Denieca Brown