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Chastanet Rings Campaign Bell?

Says Domestic Economy Contracted by 20.4% in Financial Year 2020/2021

Has Prime Minister Allen Chastanet this week signaled the start of his party’s election campaign when he said in parliament: “we have begun the task of taking our stewardship over the last five years to the electorate in our quest for a second term and we are doing so with confidence and pride?”

Image of Prime Minister Allen Chastanet
Prime Minister Allen Chastanet

Such a thought is not far-fetched, given the explosion of political rhetoric these days over the local media landscape and the fact that elections must be held this year.

The prime minister’s remarks were made during his delivery of the 2021/2022 budget address, what is officially known as the Appropriation’s Bill.

Stating that the Bill finds Saint Lucians at two distinct pathways one being a possible end to the pandemic (barring any resurgence in the form of a fourth wave), the prime minister spoke of how his government had managed the COVID-19 pandemic in the country with the right and timely mix of responses in terms of protocols and policy measures to protect lives and livelihoods.

“Contrary to what our critics are saying, keeping our hotels and borders open, together with our protocols have been critical to our success thus far. As a result, Mr. Speaker, as of July to December, this year, we will have more airlift into Saint Lucia than we had at that same time in 2019,” Chastanet said.

However his review of the local economy for the 2020/2021 financial year revealed a contraction of 20.4 percent as estimated by the Central Statistical Office (CSO).

“Output in the tourism sector is estimated to have declined by about 60 percent in 2020, as a result of the decline in the number of visitors to Saint Lucia which fell by almost 65 percent compared to the previous year when we recorded 1,297,163 (there were 458,943 visitors in 2020),” Chastanet said.

He added that the economy in 2020 experienced the combined effect of the near absence of the cruise ship sector (closed from March 2020), which supplies on average over 700,000 visitors, and an almost 70 percent decline in stay-over arrivals, which totaled just over 130,000.

He spoke of the construction sector being adversely affected by the pandemic, albeit in different ways, including delays and disruptions from the effects of protocols like closures and curfews.

“In order to support the sector the Government fast tracked projects and increased public sector expenditure to just over $200 million on preplanned projects to stimulate the economy. Given closures and employment losses in tourism and elsewhere, private sector construction activity in 2020 was insufficient to stave off an overall contraction in the sector, estimated at 9.9 percent,” Chastanet said.

He noted that the agriculture sector was not spared the ravages of the pandemic and contracted by 9.5 percent in the face of an array of supply challenges, as well as depressed domestic demand due to the closure of hotels and restaurants. The agriculture sector also reeled from a decline in banana production and exports by almost 30 percent, which can be largely attributed to changes in the marketing and distribution arrangements in the UK market, on account of the dissolution of Winfresh UK Ltd. and the disposal of strategic assets which support distribution and enhance competitiveness of Windward Islands bananas.

“This outturn was not offset by exports to the region which also recorded a decline of over 25 percent. The critical importance of tourism is further demonstrated by the fact that most sub-sectors of agriculture that supplied the tourism industry such as the non-banana agriculture, livestock, local fishing as well as the emerging new sectors like seamoss production among others, posted contractions in performance on account of the loss of the critical demand provided by the tourist market,” Chastanet said.

 He, however spoke of some very encouraging signs from the manufacturing sector which responded and took advantage of opportunities to supply locally produced protective and sanitary products to assist with the fight against COVID-19, and also fill gaps created by disruptions to supply chains.

 “Despite these efforts, the sector still contracted by 10.4 percent relative to its performance in 2019. Again, this is largely due to reduced demand from the local tourism industry, together with lower supermarket demand reflective of a drop in employment levels,” the prime minister said.

 He said that the construction, ICT and manufacturing sectors played a significant role in absorbing workers displaced from the tourism sector, thereby helping to cushion the effects of the pandemic on the tourism sector.

“Keeping our borders open so some hotels could operate safely, supporting the expansion of our call centres, all helped to curtail the fallout from job losses due to the pandemic,” Chastanet said.

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