NASSAU, Bahamas, CMC – Prime Minister Phillip Davis says the Bahamian economy has recovered to its pre-COVID-19 pandemic level since 2022, with growth momentum continuing into 2023.
Davis, delivering his administration’s tax-free US$3,54 billion national budget to Parliament earlier this week, said the recently released gross domestic product (GDP) estimates by The Bahamas National Statistical Institute (BNSI) indicated that real GDP growth was estimated at 2.6 percent in 2023, while GDP in nominal terms increased by 9.2 percent.
He said the International Monetary Fund (IMF) now projects that the Bahamian economy will post real growth at 2.3 percent in 2024 as large tourist inflows fuel the economy and inflation continues to decline.
Davis said the most recent official data from BNSI shows a 22 percent growth in the construction industry, reflecting robust economic conditions, government investment in infrastructural improvements, and increased private investment in building projects.
He said the tourism sector has seen significant expansion, driven by a rise in tourist arrivals. Service industries such as hotels, casinos, and sporting facilities benefited from the increase in tourist activity, growing by 10 percent. Further, the rise in tourist inflows has resulted in an increase in tourism expenditure that has driven a five percent gain in export services.
Household consumption saw an eight percent rise in 2023 compared to the previous year. Household consumption levels reflect the spending behavior of households and are often considered a proxy for assessing economic well-being.
Prime Minister Davis said this increase in purchasing power shows that positive economic developments are reaching Bahamian families and that Customs data reveal an increase in household items in 2023 relative to 2022.
Prime Minister Davis told legislators that the Bahamas had 9.7 million visitors in 2023, representing a 37.9 percent increase from the seven million arrivals the previous year. He said the influx of visitors last year underscored the substantial growth in arrivals since the peak in 2019 when there were 7.3 million visitors.
At present, during the first three months of 2024, the number of arrivals reached three million, reflecting a 14.9 percent growth compared to the first three months of 2023.
“In other words, 2024 is off to a solid beginning, surpassing not only the levels recorded in 2023 but also exceeding those of 2019 by 50.8 percent for the same time frame,” Davis said, underscoring the importance of the sector to the local economy.
Davis said that investors’ confidence in the country had improved and “as a result, we’ve attracted and developed more than US$7.2 billion in investments, representing more than 7,000 new jobs for Bahamians, since we entered office.
He said projects like Royal Caribbean’s Royal Beach Club on Paradise Island, Carnival Cruise Lines’ new Celebration Key development in Grand Bahama, and the Disney entertainment facility in Eleuthera represent important commitments from some of the world’s leading companies and will generate significant opportunities for Bahamians.
“We are finalizing discussions with Baha Mar for an exciting new development phase at the Melia property,” he said, adding that the planned expansion of the Grand Bahama Shipyard is set to bring new business opportunities, further diversifying our economy and bolstering our industrial sector.
“.…projects and investments like these are crucial drivers of our economic resurgence, and we intend to ensure that Bahamians can benefit from the entrepreneurial opportunities that follow such expansive development.
“As foreign direct investment continues to grow, we anticipate a rise in job and entrepreneurial opportunities and growth in the construction sector.”
Prime Minister Davis acknowledged that the global inflation crisis had severely affected the country.
“The cost of living on an island where we need to import so much of what we consume was already too high, and the global inflation crisis was yet another unwelcome shock – we needed a break after Hurricane Dorian and the COVID pandemic, but instead we got global supply chain interruptions, turbulent commodity markets, and higher food and energy costs.
“Inflation in The Bahamas has been downward since its peak in mid-2022 and is lower than regional peers. The inflation rate in 2023 moderated to 3.1 percent from 5.6 percent in 2022. According to the IMF, inflation in The Bahamas is forecast to decline to 2.4 percent in 2024,” Davis said.
He said that last year, the BNSI released its updated labor force survey, and the results showed that unemployment was at its lowest level since 2008, at 8.8 percent in 2023.
For the first time in over a decade, labor force participation was higher, and the unemployment rate was lower for women than men.
Davis said a review of other key indicators shows that monetary conditions in The Bahamas remain favorable and support stability in our exchange rate.
External reserves increased by US$547 million during the initial three months of 2024, bringing the total to US$2.9 billion.
He said this growth was driven by net foreign currency inflows from the private sector, which was not achieved through borrowing.
“It is projected that external reserves will continue to be strong, supported by tourism and other private sector activities inflows. External balances are expected to exceed international standards, providing ample support for the Bahamian dollar’s currency peg.
“Further, the estimated current account deficit narrowed at the end of 2023, as the services account surplus strengthened, supported by the ongoing gains in tourism earnings.
He said that while the budget presentation includes a discussion of the nine-month fiscal performance ending in March, consistent with that pattern, March 2024 was indeed a strong month. The preliminary total revenue for April 2024 is estimated to be US$385.8 million, reflecting a significant increase of US$108.6 million, or 39.2 percent, compared to April in the previous year.
He said the strong revenue performance in April shows that fourth-quarter revenue will be solid, which provides the basis for our favorable outlook for meeting our revenue targets by the end of the fiscal year.
He said a review of the fiscal performance from July 2023 to March 2024 showed that total revenue amounted to US$2.2 billion in the first nine months of the fiscal year. This marks an increase of $112.4 million, or 5.4 percent, compared to the previous fiscal year.
At this time, total revenue stood at 66 percent of the budget forecast, not out of line with expectations owing to timing considerations,” Davis said, noting that this improvement in revenue performance resulted from an increase in tax revenue of US$136.9 million to a total of two billion US dollars.
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