Island nations face ‘perfect storm’ as coronavirus meets hurricane season

Small island states will be hit by a “perfect storm” in the coming months as the Covid-19 pandemic and extreme weather conditions strike simultaneously, the head of the Commonwealth has warned.

Patricia Scotland, secretary-general of the Commonwealth — an alliance of 54 countries with a combined population of 2.4 billion people — told CNBC in a phone call that several economies will be forced into a “perilous” situation this year by the overlapping crises.

“We’ve been trying really hard to get the world to wake up to the real perilous state in which many of our small states are,” she said. “We have three quite terrifying things intersecting.”

The interaction between the pandemic, the resulting economic downturn, a slump in tourism and the rising prevalence of extreme weather events meant many Caribbean and Pacific Island nations were now facing “the perfect storm,” she said.

The first issue, Scotland said, was the natural vulnerability of those small states to climate change and destructive weather.

She explained that destructive, large-scale hurricanes and tropical storms used to be a once-in-a-lifetime occurrence. But that was no longer the case, she said, meaning island nations were facing an “existential threat.” 

“These hurricanes aren’t coming every 72 years, they’re coming every other year and getting bigger and bigger,” she said, recalling Tropical Storm Erika in 2015, Hurricanes Irma and Maria in 2017 and Cyclone Harold in 2020. The storms have caused billions of dollars in damages across multiple economies, including the U.S., in recent years.

“The Caribbean is facing not only Covid-19, but the fact that when the new hurricane season hits, they may be destroyed,” Scotland added. “Their economy will be greatly weakened, and we are looking at some of the most heavily indebted countries in the world. And this debt hasn’t come about because of their fiscal ineptitude — it has come about because they have had to respond to climatic and other events like the pandemic which are beyond their control.”

The Atlantic hurricane season runs from June 1 to November 30, with the U.S. National Oceanographic and Atmospheric Administration predicting “above-normal activity” for the 2020 season.

“We then have a pandemic which has really devastated the globe,” Scotland added. “Now, as a result of those two intersecting, we are facing the reality that we are likely to see an economic tsunami coming out of this.”

The IMF has warned that the world is soon likely to see the most severe recession since the 1930s, while the World Bank has predicted global gross domestic product will contract by 5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year.

“If you look at those issues intersecting with each other, you’ll see that the vulnerable states are really at a point which will mean that many of them are facing that existential threat — no longer just on one level, but on three,” Scotland said. “So I think for many of our countries, there’s never been such a perilous time.”

As well as being threatened by a global recession, weather threats and the ongoing health crisis, many island economies have been hit hard by plummeting international tourism amid the pandemic.

The Bahamas, for example, generates 75{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to 80{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of its GDP from tourism, according to Moody’s.

But lockdown measures, border closures and quarantine rules mean travelers from all over the world have been forced to cancel or postpone vacations this year.

S&P Global Ratings predicted in March that “Sun, Sea, and Sand-focused” island economies would be hardest hit by the industry slump, with tourism in the Caribbean likely to decline by 60{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to 70{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} year-on-year between April and December. Aruba, the Bahamas, Barbados, Cape Verde, and Fiji were named by the organization as some of the countries most economically at risk.

The International Monetary Fund, meanwhile, expects growth in the Caribbean to contract by 6.2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in 2020 due to the sudden drop in tourism — marking the region’s deepest recession in more than half a century.

“If you are primarily dependent on tourism as one of your mainstays, it makes you incredibly vulnerable during this period, and now we have the start of the hurricane season,” Scotland warned.

“The global economy is going to be affected by the pandemic, and many of the smaller countries are dependent on richer countries having tourists.”

The Commonwealth is a voluntary association, with member states agreeing to a charter of shared goals, values and principals. With links to the British Empire, members include former British colonies New Zealand, Jamaica and India, but today any country is able to join the organization.