Categorized | National News

Central Bank Reveals Economic Growth to Continue

The tourism sector continues to drive the Bahamian economy, as seen in the Central Bank’s quarterly report that indicated a strengthening in the economy since 2018.

In its latest quarterly economic and financial report, the Central Bank revealed that the growth is largely attributed to the tourism sector, reflected in growth in stopover visitors. 

Central Bank Governor John Rolle said the vacation rental market is a strong factor in that growth, with improvement in the hotel segment, one of the most dominant factors because of the increase in hotel rooms and successful selling of those rooms. 

“In particular, the industry absorbed the room capacity boost from Baha Mar, both increasing the average room occupancy rates and securing higher average daily room rates,” Mr. Rolle said.  

The governor also revealed a steady modest flow of foreign investments provided economic stimulus, particularly through construction, with much of it occurring in the tourism sector, in resort and residential facilities and in cruise-line attractions.

“The foreign exchange sector activities have had positive impact on financial sector indicators and the strength of The Bahamas’ external reserves,” Mr. Rolle said. 

“Seasonal growth in the reserves in the first half of 2019 was at double the pace of gains recorded in the first half of 2018.

“At the end of June, the external reserve were just above $1.5 billion, very close to the same level as in 2018. Driving this performance, there was a more than doubling in the net amount of net foreign exchange purchased by commercial banks from the private sector that were subsequently sold to the Central Bank.

“A part of this though, was also that the private sector’s spending on imports appeared to be reduced in comparison to 2018.”

The bank’s governor also indicated that there will be continued growth for the tourism sector in 2020, but at a slower pace as hotel room inventories will not increase by the same degree as last year, adding that growth needed for the industry is growth focused on getting visitors to come to the country to spend more money while here to get more gains from tourism.

“Ultimately over the longer term, you’re going to expect some of your growth to be tied to some continuous growth in capacity, but manageable growth in capacity,” he said.

“You have to deliver the product up to certain quality standard, so you have to make sure that you have the people to train and deliver the service up to competitive standards.

“If you try to place growth in rooms too fast ahead of how you prepare your people to deliver the services, it won’t work in terms of being sustainable.

“So, The Bahamas has to manage that, but at the same time recognize that there is a lot of scope to increase the returns from tourism.”

As for an overall view of The Bahamas’ financial growth, beyond present risks of hurricanes, uncertainties from ongoing international trade disputes and what’s on the horizon for Europe as they face the Brexit challenge, Mr. Rolle said The Bahamas is expected to continue to grow over the next few years.

“Our domestic banking sector will continue to experience high levels of liquidity and the foreign reserves of the Central Bank are expected to continue to experience year on year growth, but at a mild pace,” Mr. Rolle said.

Written by Jones Bahamas

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