President Tommy Remengesau Jr said Palau can survive the impact of the coronavirus, but the nation should "face this crisis together, with unity, understanding, and strength."
Mr Remengesau delivered his final State of the Republic Address (SORA) on Thursday as he finishes the last year of his two-term presidency.
President Remengesau Jr was a two-term senator from (1984-1992); Vice President from 1992- 2000; Palau President (2001-2008), Senator (2009-2012), and President again from 2013 until his second term as president which will end in 2020.
The president has a three-decade-long career in Palauan politics which would end this year.
His last term, however, is marked with the Covid-19 pandemic, which he said are "unusually hard times, not only in Palau but for populations and families throughout the world."
Palau is one of the few nations in the world that has no confirmed case of Covid-19 and he stressed that the best way to eliminate the coronavirus is to keep it out of Palau.
But, at the same time, he said that the country must prepare for the worst "with proper planning and capacity."
As a tourism-reliant nation, Mr Remengesau said Palau is projecting a decline of 52% in tourist arrivals in 2020 and 92% in 2021.
The tourism decline will also reflect in a lowered Gross Domestic Product which is 23% for 2020 and 2021, totaling over US$60 million.
Mr Remengesau also said there are over 2,600 jobs expected to be directly affected, representing approximately 38% of the private sector.
For 2020 and 2021, he said Palau would lose $45 million not taking into account emergency health response or economic relief measures.
But despite the grim outlook for the economy, he stressed that the health of the people will be the priority and "when we do make the decision to open up, it will be based on scientific and medical justifications and not for economic reasons."
He said, the re-opening of Palau anew to tourism will "be gradual and will be undertaken in a staged manner and with a great deal of caution so as to ensure success. There is no room for error."
"As we fight this virus together, understand that we are doing, and will do, whatever is necessary to protect the people of Palau. Together we will survive this emergency and become stronger for our effort. Let us pray that our efforts keep us and our children safe."
The president said Palau has survived crisis before, from a major dengue fever outbreak to devastating storms to the impact of 9/11, SARS impact to tourism and extreme drought among others.
"Through all of these adversities, we Palauans have stood tall and together to take whatever actions were necessary to survive the disaster and to persevere into the future and for our children. I guarantee you today that we will once again endure and come out of this crisis more resilient and better prepared going forward."
He also thanked the support of the global community such as Taiwan, Australia and the United States in shoring up defenses against the pandemic.
He said Palau already has the testing capacity, thanks to the US and Taiwan.
"And while our front-line workers pit their strength against these threats to health and safety with our full support, we must fight the economic crisis just as hard. We must do so by preserving the best and improving the rest."
"It is time to double-down on the policies and friendships that have brought us to the strong position we are now in, even during global crisis," he said.