A new study by the Center for Global Development (CGD) and the Inter-American Development Bank (IDB) finds that many companies in the Caribbean survived the pandemic by slashing investment. However, this decline now threatens to constrain the region's economic recovery.
To reverse the situation and prevent it from leading to a type of "economic long COVID," where a weak private sector fails to create jobs and stimulate economic growth, governments in the region are being encouraged to actively pursue a series of policies to help companies boost investment and hire new employees.
These are among the key findings of the new report which examined the balance sheets from a large number of companies across the region and discovered that, despite an economic recovery in 2020 and 2021, capital levels at companies are still 20 per cent lower than they were before the pandemic began.
"While it is good news that relatively few larger firms failed, the drop in their productive capital implies significant scarring and threatens the region's economic growth," said Andrew Powell, principal advisor of the Research Department at the IDB.
