NASSAU, Bahamas, CMC -The Central Bank of the Bahamas (CBB) says indications are that during August, the domestic economy maintained its growth momentum, albeit at a moderated pace, as the recovery from the COVID-19 pandemic neared completion, and economic indicators returned closer their expected medium-term trajectory.
In its monthly “Economic and Financial Developments” for August, the CBB said tourism output remained buoyant, supported by ongoing gains in both the high value-added air segment and the sea component, because of the persistent demand for travel in key source markets.
In price developments, average consumer price inflation, as measured by changes in the average Retail Price Index (RPI) for The Bahamas, rose during the 12 months to June 2023, attributed to the pass-through effects of higher prices on imported oil and other goods.
The CBB said monetary trends for August were marked by a contraction in banking sector liquidity, with the expansion in domestic credit contrasting with the reduction in the deposit base. Further, external reserves decreased during the review month, mainly due to increased net foreign currency outflows through the private sector.
According to the CBB, the tourism sector output sustained its robust growth in monthly trends, reflective of healthy gains in both the high-value air component and sea traffic, as the demand for travel in crucial source markets persisted.
Official data from the Ministry of Tourism (MOT) revealed that total visitor arrivals expanded to 0.74 million in August from 0.62 million in the corresponding period of 2022. Specifically, the dominant sea segment rose to 0.62 million from 0.50 million passengers in the prior year.
Year-to-date, total arrivals strengthened to 6.6 million visitors, vis-àvis 4.3 million in the 2022 period. Contributing to this outcome, air arrivals increased to 1.3 million passengers from one million in the previous year, reflecting gains in all major markets. Similarly, sea arrivals accelerated to 5.4 million from 3.3 million visitors the preceding year.
The CBB said that price indicators showed that year-over-year, the average daily room rate (ADR) for entire place listings grew 8.4 percent to US$549.65, and for hotel comparable listings, 10.5 percent to US$197.71.
The CBB said that average domestic consumer price inflation, as measured by the All Bahamas Retail Price Index, rose to 5.2 percent during the 12 months to June, from 4.4 percent in the comparative 2022 period, explained by the pass-through effects of higher global oil prices and other costlier imports.
The central bank said that a contraction in liquidity marked liquidity monetary trends for August, as the domestic credit expansion contrasted with the deposit base reduction.
In particular, excess liquid assets, a broad measure of liquidity, decreased by 24.6 million to US$2,995.8 million, a reversal from the prior year’s accumulation of US$14 million. Likewise, excess reserves, the narrow measure of liquidity, fell by US$22.9 million to US$2,021 million, a turnaround from a US$4.8 million gain a year earlier,” the CBB said.
It noted that the external reserves during August reduced by US$6.9 million to 2,730.3 million, notably lower than the US$63.3 million decline in 2022.
“Reflective of this development, the Central Bank’s net sales to commercial banks widened to US$24.6 million from US$13.6 million in 2022. Likewise, commercial banks net foreign currency outflows to their customers increased to US$74.6 million from US$31.6 million a year earlier. In contrast, the Central Bank’s net foreign currency transactions with the public sector switched to a net purchase of US$18.8 million, from a net outflow of US$54.1 million last year.”
The central bank said the total Bahamian dollar credit growth slowed to US$43.8 million in August from US$71.7 million in the same period last year.
It said leading to this outturn, the expansion in net claims on the Government slowed to US$40.7 million from US$64.5 million a year earlier. Further, the reduction in credit to public corporations extended to US$11.3 million from just US$0.2 million in the prior year.
Providing some offset, private sector credit growth approximately doubled to US$14.4 million, supported by broad-based gains. Specifically, consumer credit rose by US$6.5 million, a turnaround from a US$8.2 million reduction in 2022, while mortgages increased by US$2.4 million, in contrast to a US$7.3 million decline in the prior year.
However, the gain in commercial loans tapered to US$5.5 million from US$23.0 million in the preceding year.
The central bank said domestic foreign currency credit grew by US$8.6 million, a moderation from the US$34.1 million buildup in the prior year.
“Specifically, gains in private sector credit slowed to $5.6 million from $31.9 million in 2022. In particular, mortgage growth moderated to seven million US dollars from US$27.2 million, and commercial credit fell by US$1.4 million, vis-àvis a US$4.7 million increase a year earlier. “Meanwhile, net claims on the Government rose further by three million US dollars, after the US 2.3 million rise a year earlier. In addition, credit to the rest of the public sector was unchanged, similar to the previous year,” the CBB added.
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