World Bank predicts Pacific region's economies won’t recover until 2022
Although Covid-19 vaccine is now in its early stages of distribution, the World Bank advises Pacific island countries to take caution in reopening, recommending that they adopt a phased approach to resuming international travel.
In its report, titled “How Could the Pacific Restore International Travel?” the World Bank noted the need for the Pacific island nations to keep the safeguard against Covid-19 outbreaks to ensure a steady economic recovery.
“Due to weak health systems, any large Covid-19 outbreaks could have devastating consequences for the region,” said Michel Kerf, World Bank country director for Papua New Guinea and the Pacific Islands.
“Recent World Bank surveys show that the pandemic’s economic impacts and closed borders are forcing families to make tough choices, like going without food or withdrawing children from schooling, and these can have harmful consequences for years to come,” Kerf added.
Most Pacific countries have so far managed to dodge the Covid-19 pandemic through international border closures. However, the economic impacts of the pandemic have been significant in the region, where economies heavily rely on tourism,
Recent economic modeling by the World Bank shows that all Pacific economies are estimated to have contracted during the pandemic-stricken year. Fiji, for example, is estimated to have seen a reduction in GDP of close to 20 percent.
“While a modest recovery is expected in 2021, output levels are not expected to reach pre-Covid-19 levels until 2022 or later,” the World Bank said.
The World Bank is among the main donors that provide assistance to Fiji, Kiribati, Marshall Islands, Papua New Guinea, Samoa, Tonga and Vanuatu. This year, it has provided more than $45 million in Covid response assistance to Pacific island nations.
The report proposes that re-opening travel to the Pacific should be done in phases, but it cautions that relaxing strict border policies alone will not immediately deliver economic benefits.
The three phases are:
*Phase 1 beginning between January and July 2021: Pre-approved travel for specific groups (more temporary workers, students etc.) Strong testing and quarantine measures would be the foundation for any travel bubble.
*Phase 2 beginning between June 2021 and May 2022: A ‘travel bubble’ with commercial flights for business and tourism. This would require sustained COVID-19 containment, improved testing and tracing, and initial roll-out of vaccinations.
* Phase 3 beginning between October 2021 and October 2022: A ‘new normal’. Longer term general international travel requiring wide distribution of COVID-19 vaccines and treatment with vastly improved testing and tracing.
The report warns that Pacific governments and their partners will have to invest significantly in testing and tracing capabilities at every phase of re-opening, and each country will have to weigh this financial burden with the potential benefits of resuming international travel.
“The ‘triple win’ of labor mobility – for the individual worker, for Australian and New Zealand businesses, and for PNG and Pacific economies - means we highly recommend it be prioritized in phase 1,” said Andrew Blackman, author of the report.
“Tourism is also central to several Pacific economies, with many flow-on effects for domestic supply chains and benefits for both genders. Not many other industries deliver the same economic and social benefits but opening up to tourists represents a big health risk and so must be planned carefully. The World Bank is committed to supporting our partner countries across the region as they determine the best course of action,” Blackman added.