Covid: Guernsey economy predicted to shrink by 7% in 2020

Guernsey's economy is expected to have shrunk by nearly 7% in 2020 because of the Covid-19 pandemic, new forecasts show.

A recovery of between 2% and 5% in 2021 is also predicted in the States of Guernsey report.

Deputy Peter Ferbrache acknowledged the fall was large, but said the island was doing "better than those around us".

The economy is anticipated to shrink by between 5% and 8%, with a 6.6% fall most likely, the report said.

The forecasts are in Gross Value Added (GVA), a measure of the size of the economy which factors in overall output from businesses and households.

The report lays out the expected fall is of a "similar magnitude" to the 7.5% GVA drop predicted by Jersey in August, but notes this was before the hospitality sector was closed to combat rising coronavirus cases.

However, the report emphasises the "significant degree of uncertainty" of forecasting, given the "unprecedented nature of the economic and public health crisis".

President of the policy and resources committee Peter Ferbrache recognised the drop was significant, but argued Guernsey was doing "better than those around us, near us and even further afield".

He noted the island's retail, construction and other sectors had "bounced back" to an extent, but acknowledged key sectors were currently not "growing and developing".

Deputy Ferbrache said: "We still have confidence our economy will bounce back next year.

"What is absolutely certain is that for the years to come we'll need the prudent economic balance that Guernsey has adopted over a number of years.

"The economy will be such that there won't be money to spend on vanity projects and there won't be money to waste, every penny will have to be properly spent."