The Ministry of Finance has refuted suggestions that the country’s real GDP growth of 2.6 percent in 2023 signals trouble for the future, asserting that the nation’s medium-to-long-term growth prospects are encouraging.
The Ministry noted that the sluggish growth observed in the retail and utilities sectors should be seen as a one-time occurrence attributed to last year’s surge in fuel prices.
Last week, the Bahamas National Statistical Institute (BNSI) released its preliminary GDP estimates for 2023, which the Ministry of Finance described as highly positive, with nominal GDP increasing by 9.2 percent and real GDP by 2.6 percent.
“The nominal growth surpassed the Government’s mid-year projection for FY2023/24 of 3.7 percent, while the real projection exceeded the mid-year estimate of 1.1 percent,” the Ministry noted.
Additionally, the Ministry acknowledged that BNSI’s GDP publication schedule would see these figures revised over the next year and finalized in about two years as more statistical data becomes available, although significant adjustments are unlikely.
Addressing concerns over the 2.6 percent real GDP growth being lower than previous IMF estimates, the Ministry emphasized the importance of holistic analytical assessment in evaluating overall economic growth and health. It underscored that economic statistics such as nominal or real GDP growth rates should not be assessed in isolation. Real GDP, it explained, is an estimate of economic activity excluding the effects of inflation, calculated using a broader measure of inflation called the GDP deflator.
Furthermore, the Ministry highlighted the strengthening of the domestic economy due to the government’s deliberate strategy to stabilize public finances, with service exports, mainly tourism-related, increasing by $200 million and real construction activity growing by 22 percent.
“For The Bahamas, according to the BNSI, the economic expansion that the country is currently experiencing is driven by strong tourism and construction activity supported by foreign direct investment and an improved domestic economy. The domestic economy has strengthened because of a deliberate strategy of the government to stabilize the public finances. The Ministry noted that service exports, mainly tourism-related, grew by $200 million, and real construction activity gr”w by 22 percent,” the Ministry noted.
Regarding the stunted growth observed in the utilities and retail sectors, the Ministry attri years it to last year’s spike in fuel prices, stressing that this should be considered a temporary event with no lasticountry’s on the country’s growth trajectory. It expressed confidence in the medium and long-term growth prospects for The Bahamas, citing the 2.6 percent real GDP growth as country’s be the country’s recent average, excluding post-pandemic adjustments. The Ministry anticipates continued robust real GDP growth as global prices normalize, facilitating growth in the retail and utility sectors.
