How Covid-19 has affected well-being in Central America and the Caribbean

Dear Editor,

Countries in Central America and the Caribbean all recorded declines in their Human Development Index scores in the 2021-2022 edition of the Human Development Report, with the exception of Guyana and Nicaragua. The decline was above the global average for all but four of these countries, three of which derive most of their foreign income from tourism. The Bahamas was the least affected country in this region, with a decline of 0.5% between 2019 and 2021, compared to a global average loss of 0.9%. The Bahamas earns two-thirds of annual foreign currency inflows from tourism. Other countries that suffered a less severe impact than the global average are the Dominican Republic (DR), Grenada and Saint Kitts-Nevis. The DR is the only one to have a significant source of foreign income other than tourism; exports of clothing and medical supplies bring the country 36% of annual foreign income, of which 25% comes from tourism. Grenada and St. Kitts-Nevis depend on tourism and related services for the bulk of foreign revenue.

On average, countries in the wider Latin America and Caribbean (LAC) region have been more severely affected by Covid-19 than the global average, with a 1.8% decline between 2019 and 2021, i.e. the twice the world average. Ten countries in the Central America and Caribbean sub-region have been more severely affected by Covid-19 than the world as a whole, but have suffered less severe losses than for the larger group that includes all of Latin America. These ten countries include all types of economies found in the region. Four countries have no significant source of foreign income other than tourism: Barbados, Dominica, Jamaica and Antigua-Barbuda. Also in this group are two countries whose main exports are clothing and household appliances, Costa Rica and Panama. Honduras exports agricultural products and Trinidad and Tobago is an oil exporter. Two countries, El Salvador and Haiti, now depend mainly on remittances from abroad for their foreign currency needs.

The worst performing countries in Central America and the Caribbean suffered losses above 1.8%, the average for the wider Latin America and Caribbean region. This group includes Guatemala, which mainly exports agricultural products, as well as three countries that depend almost entirely on tourism, Saint Vincent and the Grenadines, Saint Lucia and Cuba. Belize, which is also part of this group, derives most of its foreign currency from tourism, but it also exports agricultural products. The most severe drop was in Suriname, where the Human Development Index score fell by 3.3% between 2019 and 2021.

The new Human Development Report, published on September 8, 2022, gives an incomplete view of the impact of the Covid-19 pandemic. The HDI combines three elements, the purchasing power of the average national income, life expectancy and years of schooling. Human Development Report 2021 data includes impact of Covid-19 on income and life expectancy; however, it will not be clear for some time what effect makeshift arrangements and wasted time in school systems will have on dropout rates and other indicators of academic achievement. Long-term health effects are also unknown at this time.

There are two countries in Central America and the Caribbean where the HDI score actually improved during the Covid-19 period. Guyana’s score rose by 0.8%, entirely due to the start of oil production, which spurred a 65% increase in the country’s per capita national income. National income per capita increased by 7% in Nicaragua and the country avoided any decline in life expectancy, leading to a 0.5% improvement in the country’s HDI. However, in both cases, the country’s position in the global HDI rankings remains below the average for Latin America and the Caribbean, as well as the world average.

Yours faithfully,
DeLisle Worrell

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