The Central Bank predicts The Bahamas’ economic growth to be in the low two percent range, still moderately above the estimate of the economy’s medium-term potential.
On Monday, Central Bank Governor John Rolle stated that although the economy has a positive outlook for 2024, enabling more employment creation and continued reduction in the fiscal deficit, downside risks persist from potential headwinds to tourism, particularly if international central banks prolong their fight against inflation. Additionally, travel demand and import inflation remain vulnerable to the harmful effects of conflicts in Europe and the Middle East.
“In 2023, the economy is estimated to have grown in the four percent range, a leveling off from the significant post-pandemic recovery of around 14 percent in 2022. This period captured a robust boost in the cruise sector’s contribution, completion of the occupancy recovery in the stopover sector, and healthy appreciation in average pricing for stopover accommodations among both hotels and vacation rental properties. In 2024, growth is expected to be within the low two percent range, still moderately above the estimate of the economy’s medium-term potential.”
Earlier this month, the World Bank revised its 2024 growth projection for The Bahamas down from two percent to 1.8 percent.
According to Rolle, the Central Bank expects that growth in 2024 and beyond will settle further to more closely resemble The Bahamas’ longer-term potential, although a period of acceleration could occur after hotel capacity is replenished in New Providence.
Addressing the Central Bank’s external reserves, Rolle noted a decrease of almost $250 million in 2023, attributed to a strong reversal in net transactions with the public sector to a net sale of $360 million, compared to a net purchase of $206 million in 2022. He noted that the government could reduce its net reliance on foreign currency borrowing, which had contributed to the net foreign exchange sales to the Central Bank in 2022.
He also noted that through the end of this month, the external balances show a modest rebound from the year-end close to about $2.75 billion. This, he explained, is mainly due to timing in the government’s US dollar refinancing operations since December, which paid off some overdraft balances with domestic lenders and helped roll over significant US debt.
