The COVID-19 Pandemic Puts Small Island Developing Economies in Dire Straits

COVID-19 (coronavirus) is posing significant health and economic risks to small island developing economies, given their small economic base, high degree of openness and extreme dependence on economic performance of a few developed economies. Amid sharp falls in tourism revenues and remittances flows, small island economies are likely to experience the most pronounced contraction in 2020, further exacerbating their vulnerability to economic and climatic shocks. Disproportionately high debt-servicing burdens of many small island economies will weaken their external balance, potentially increasing the likelihood of debt defaults. Many small island economies—highly dependent on food imports—face the added challenge of ensuring food security during the health and economic crisis. The pandemic response will constrain the fiscal space of small island developing economies and exacerbate their vulnerabilities to natural disasters brought about by climate change. Scaled-up international development cooperation will remain critical for ensuring that small island economies can strengthen their health response to the pandemic, while safeguarding food security and averting an economic crisis.