NASSAU, Bahamas, CMC – The Central Bank of the Bahamas (CBB) says that the domestic economy’s growth trajectory persisted, albeit slower than the previous year, with economic indicators continuing to normalize closer to their expected medium-term potential.
In its “Monthly Economic and Financial Developments October 2024,” the bank said that during October, significant economies maintained their moderate pace of economic growth. However, developments continued to be impacted by the protracted geopolitical tensions in the Middle East and Eastern Europe.
“Against this backdrop, most major central banks paused their interest rate reduction stance during the review month, but signaled future rate cuts to encourage further economic growth, as inflation continues to moderate.”
The CBB said that tourism output continued to record healthy gains but at a moderated pace. This was supported by robust growth in the cruise component, as the stopover segment remained constrained by accommodation capacity.
In price developments, average consumer price inflation, as measured by changes in the average Retail Price Index (RPI) for The Bahamas, declined during the 12 months to August 2024, vis-à-vis the corresponding 2023 period, owing to a decline in price pressures for imported fuel and other goods and services.
The CBB said monetary sector developments featured a more moderate decline in banking sector liquidity than the previous year. However, the deposit base’s buildup exceeded the domestic credit increase.
“Similarly, the reduction in external reserves slowed notably during the review month, primarily due to net foreign currency inflows through the public sector and tapering in net seasonal outflows via the private sector.
“Expectations are that the pace of economic expansion will moderate over the remainder of 2024 as the domestic economy continues to converge toward its medium-term growth rate potential.
“Performance remains significantly linked to ongoing gains in tourism. Sustained foreign investment foreign investment projects are also anticipated to provide growth through construction activities.
“Nonetheless, downside risks to tourism persist, associated mainly with exogenous factors, such as geopolitical tensions and heightened global oil prices, which could impede travel sector activity,” the CBB said in its monthly report.
Tourism monthly data suggest that the tourism sector continued to post healthy gains during the review month, although at a more tempered pace, given stopover capacity constraints.
According to the most recent data provided by the Nassau Airport Development Company Limited (NAD), total departures reduced by 11.1 percent to 90,900 in October compared to the same period in 2023.
Leading this outcome, US departures contracted by 13.9 percent to 75,186. In a slight offset, international departures grew by 5.6 percent to 15,714 relative to the comparative period in the preceding year.
Year-to-date, total outbound air traffic grew by 3.5 percent to 1.4 million, although markedly less than the 25.2 percent growth in the previous year. Specifically, US departures increased by 3.6 percent to 1.2 million, while international departures rose by 2.9% to 0.2 million.
The CBB said that further improvements in employment conditions are projected on the labor market front, with additional job gains concentrated in the construction and tourism sectors.
“About prices, inflation is projected to moderate, underpinned by declining price pressures in energy and other imports. Nonetheless, consumers are expected to continue to adjust to the accumulated effects of price increases in recent years.
“The upside risks to inflation that lingers hinge on global oil price uncertainty and supply chain shortages associated with geopolitical tensions in the Middle East and Eastern Europe.”
Regarding fiscal sector developments, the CBB said the government’s net financing gap should sustain its downward trend, noting that the anticipated ongoing revenue gains remain contingent on tourism-led improving trends in taxable economic activities.
“Further, net financing of the estimated budgetary gap is expected to require a blend of domestic and external borrowings, with a higher proportion of the total funding from domestic sources.”
On the monetary front, the CBB said banking sector liquidity is forecasted to remain elevated as commercial banks retain their conservative lending posture. Moreover, the economic environment should encourage banks to increase their lending activities to the private sector.
Further, external reserves are projected to remain robust, exceeding international benchmarks in 2024. However, a reduction is likely, given the anticipated rise in domestic credit. Nevertheless, external balances should remain sufficient to maintain the Bahamian dollar currency peg.
“Foreign exchange market conditions are expected to remain healthy, bolstered by tourism and other net private sector activities inflows.”
and then  says that the domestic economy's growth trajectory persisted, albeit slower than the previous year){kind=link}