• Tue. Mar 28th, 2023

Central bank of Bahamas says domestic economy recovery maintained momentum


Mar 16, 2023

The Central Bank of The Bahamas (CBB) on Wednesday said the domestic economy maintained its recovery momentum during the fourth quarter of last year, from the adverse effects of the coronavirus (COVID-19) pandemic.

In the Quarterly Economic Review providing an examination of the domestic economy’s performance, as well as sectoral developments, principally during the period October to December, the CBB said tourism output continued to record robust growth.

It said such growth was undergirded by healthy gains in the high value-added air segment and the rebound in sea traffic, reflective of the relaxed pandemic restrictions and pent-up demand for travel in the key source markets.

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“In addition, foreign investment projects, and to a lesser extent post-hurricane reconstruction work, continued to provide positive impulses to the construction sector. In price developments, domestic inflation remained elevated over the review quarter, reflective of the pass-through effects of higher global oil prices and increased costs for imported goods,” the CBB said.

It said preliminary estimates revealed that during the second quarter of the financial year 2022/23, the government’s overall deficit widened, relative to the comparative quarter of the financial year 2021/22.

“Underlying this outturn, spending recovery paced faster than the value-added tax (VAT)led growth in revenue, buoyed by improving economic conditions. Budgetary financing was mainly obtained from internal sources and a drawdown in International Monetary Fund (IMF) Special Drawing Rights (SDRs).”

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The CBB said that monetary developments featured a contraction in bank liquidity, as the expansion in domestic credit, contrasted with the reduction in the deposit base. Correspondingly, external reserves declined, attributed to the seasonal increase in demand for foreign currency and the conversion of the IMF SDR allocations.

“Further, banks’ credit quality indicators improved during the review quarter, underpinned by the sustained strengthening in the domestic economy and ongoing loan write-offs. In addition, the latest data for the third quarter indicated a rise in banks’ overall net income, led by a decrease in bad debt provisioning.”

In the external sector, the CBB said the estimated current account deficit narrowed during the review quarter, due to a marked increase in the services account surplus, bolstered by ongoing gains in tourism earnings.

In contrast, the financial account balance switched to a net outflow, vis-à-vis an inflow in 2021, owing primarily to a reversal in other investment transactions to an outflow from an inflow a year earlier and a surge in portfolio investment outflows, associated with residents’ purchase of Government’s external bonds, the CBB said.



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