NASSAU, Bahamas, CMC—The Central Bank of the Bahamas (CBB) has said that the Bahamas economy showed signs of continued expansion during the second quarter of this year.
In its latest Quarterly Economic Review for June, the CBB said that although at a more tempered pace, with economic indicators reverting closer to the expected medium-term potential, the domestic economy continued to expand during the second quarter of 2024.
It said tourism output registered further gains, undergirded by sustained performance in high-value-added air traffic and robust increases in sea passengers, given the persistent demand for travel in major source markets.
In addition, various foreign investment projects provided steadied impetus to the construction sector. In price developments, inflationary pressures moderated, attributed to the pass-through effects of the slowdown in the rise in global oil prices and other reduced pressures on imported goods and services.
According to the CBB, preliminary estimates revealed that the government’s overall deficit reduced for the first ten months of the financial year 2023/2024 relative to the same period in 2022/2023.
“Reflective of this outturn, the growth in total revenue outstripped the rise in aggregate expenditure. Budgetary financing was led by borrowings from internal sources and included a combination of long and short-term debt instruments,” the CBB said.
On the monetary front, bank liquidity expanded during the second quarter, as the reduction in domestic credit outpaced the decline in the deposit base.
“Correspondingly, the buildup in the financial system’s net foreign assets moderated, relative to the prior year, mainly reflecting the seasonal fluctuations in net foreign currency inflows from actual sector activity.
“Meanwhile, banks’ credit quality indicators improved in the second quarter, underpinned by the sustained improvement in economic conditions and ongoing loan write-offs. In addition, the latest available data for the first quarter of 2024 revealed a rise in banks’ overall net income, partly due to a decrease in bad debt provisioning.”
Tourism’s growth momentum during the second quarter of 2024, while more tempered than in 2023, captured earnings-based expansion in the high-valued air component and increased visitor volumes for sea traffic. The industry continued to benefit from persistent demand for travel in key source markets and promotional initiatives.
According to the Ministry of Tourism data, total foreign arrivals increased by 13 percent to 2.7 million in the review quarter, exceeding the 2.4 million arrivals in the comparative period last year.
In particular, sea traffic grew by 16.3 percent to 2.2 million arrivals, albeit air traffic, indicative of stopover volumes, was relatively unchanged at 0.4 million passengers. Incremental onshore visitor volume gains for New Providence and Grand Bahamas contrasted with a headcount reduction for the Family Islands.
The figures show that the private vacation rental market registered increased earnings flows, although the rise in property inventory experienced lower average occupancy rates.
The most recent data provided by AirDNA showed that total room nights booked increased by 7.7 percent to 61,133, explained by a six percent growth in entire place listings to 42,614 and hotel comparable listings by 12 percent to 18,519, relative to the corresponding period in 2023.
“This occurred alongside a more robust increase in rental listing. Consequently, the average occupancy levels for entire place listings declined by 2.4 percentage points to 56.8 percent. Nevertheless, the associated average daily rate (ADR) rose by 4.6 percent to US$711.58. Similarly, hotel comparable listings occupancy rate fell by a one percentage point to 47.5 percent, but the ADR firmed by 1.2 percent to US$188.72.”
Data provided by the Nassau Airport Development Company Limited (NAD) showed that quarterly total departures increased by 3.3 percent to 0.4 million over the comparable period last year. Specifically, US departures rose by 2.1 percent, while other international departures rose by 2.1 percent.
The construction sector’s activity during the second quarter continued to be dominated by ongoing varied-scale foreign investment projects. Meanwhile, bank-financed domestic private-sector activity also strengthened compared to the same period last year.
In domestic financing developments, total mortgage disbursements for new construction and repairs, as reported by banks, insurance companies, and the Bahamas Mortgage Corporation, expanded by 51.2 percent (US$10.4 million) to US$30.7 million, extending the 19.1 percent growth a year earlier.
“Underlying this outturn, residential disbursements increased by nine percent (US$1.8 million) to US$22.1 million, following the 26.9 percent advancement in the prior year. Similarly, the commercial segment increased sharply to US$8.6 million, from US$0.04 million in 2023.”
The CBB said that supported by the recovery in the domestic economy, the latest quarterly estimates compiled by the Bahamas National Statistical Institute’s Labour Force Survey underscore the improvement of labor market trends.
It said that during the fourth quarter of 2023, the All Bahamas unemployment rate measured 9.9 percent vis-à-vis 10.4 percent recorded in the previous quarter. Further, the number of employed persons rose to 214,170 in the fourth quarter from 212,285 in the third quarter.
“In the meantime, the labor force participation, indicative of employment headcount trends, was estimated at 76.9 percent compared to 75.9 percent in the previous quarter.”
Domestic consumer price inflation moderated to two percent during the 12 months to May 2024, from 5.4 percent in the corresponding 2023 period.
“This reflected a slowdown in the rise in international oil prices and other reduced pressures on imported goods and services. In particular, average costs for communications declined by six percent; for transport, by 5.8 percent; and for clothing & footwear, by 0.9 percent, after posting respective gains of 2.5, 8.3, and 3.3 percent, respectively, a year earlier.”
The CBB said that in addition, average inflation decreased for housing, water, gas, electricity, and other fuels (4.2 percent), food and non-alcoholic beverages (3.0 percent), restaurants and hotels (2.5 percent), and recreation and culture (0.1 percent).
Provisional data on the government’s budgetary operations for the first ten months of the financial year showed that the overall deficit reduced by US$68.8 million to US$177.9 million compared to the comparable last financial year period.
“The outturn was on account of a US$195.9 million expansion in total revenue toUS$2,550.9 million, which outpaced the US$127.1 million growth in aggregate expenditure to US$2,728.8 million.”
The CBB said that revenue tax receipts, at 90 percent of total revenue, rose by US$216.1 million to US$2,294.9 million.
Specifically, value-added tax (VAT) collections, representing 50 percent of tax revenue, grew by US$85.6 million to US$1,148.3 million. In addition, proceeds from stamp taxes on financial and realty transactions increased by US$2.8 million to US90.9 million vis-à-vis the preceding year. Further, excise tax receipts increased to US$17 million from a mere two million dollars in the previous year.
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