Based on the available updated and corrected statistics, information and outlook ahead until the beginning of May 2020, the analysis can be summarized as follows:
Due to the outbreak of the Covid-19 pandemic around the world, the IMF expects the global economy to fall into recession in 2020 and contract by 3.0 percent.1. World market prices of commodities, in particular oil prices, will fall sharply this year. For example, the price of oil is projected at an average of USD 35 per barrel, a decrease of approximately 43 percent compared to 2019, while the gold price is expected to increase by approximately 15 percent to USD 1,600 per toz. The effects of the currency crisis, the global recession and the Covid-19 pandemic on the Surinamese economy in 2020, is a contraction of the economy by approximately 4.9 percent, an average domestic inflation of 27.9 percent and an increase of the unemployment rate by 1 percent to 9.5 percent.
Due to the use of cash reserves and time deposits without consent of the banking sector and the damaged confidence in government policy, there is an indication of foreign exchange capital flight in the first two months of 2020 in the form of a decrease of approximately USD 125 million in foreign currency deposits with the banks. By closing the borders and the air for almost 1.5 months, the supply of foreign exchange from tourist activities has become even more scarce, resulting in rising exchange rates. The adoption of the Act on Currency Control and Transaction Offices has caused a great deal of controversy in society and has also contributed to the reemergence of a black market for currencies. The selling rates on the black market for USD and Euro are around SRD 15. In the meantime, this law has been suspended by a judge and the legislator has been referred to the Constitutional Court for the further enactment of the law.
In addition to the Fitch Ratings, Moody’s Rating Agency and Standard & Poor’s have also revised the country’s credit rating last month to a “non-investment grade, high / substantial credit risk junk” status. The deterioration of the creditworthiness not only affects government access to foreign financing, but also increases the cost for the private sector when attracting supplier credits from abroad.
Download the entire file: Macro economic overview second report 2020-ENG pdf.