Monthly Economic and Financial Developments, September 2017

Published: Monday October 30th, 2017


Preliminary evidence suggests that domestic output trends remained mildly positive during the review period, as the construction sector continued to benefit from foreign investment projects, as well as post hurricane rebuilding activities. However, the passage of Hurricane Irma at the beginning of September, led to disruptions in the tourism sector, from cruise line diversions and flight cancellations. In prices developments, domestic inflation firmed marginally during the 12 months ending in August, due mainly to higher fuel costs. Meanwhile, monetary developments featured growth in both liquidity and external reserves, buoyed by the receipt of proceeds from the Government’s external borrowing.

Real Sector Tourism

Official data from the Ministry of Tourism revealed continued softness in output, with total arrivals decreasing by 2.8% to 4.3 million over the first eight months of the year, a reversal from a 4.0% gain recorded in the same period of 2016. By port of entry, air visitors contracted by 6.3%, vis-à-vis a 3.2% rise in the prior period, while the sea component eased by 1.6%, overturning the year earlier 4.3% expansion.

In terms of the various components, the growth in visitors to the dominant New Providence market slowed to 4.6% to 2.5 million tourists, from an 8.7% advance in the prior year, as the 5.7% falloff in air passengers, offset the 9.3% increase in the cruise segment. Comparatively, arrivals to the Family islands—which account for 29.8% of the total—fell by 3.0%, vis-à-vis a 0.8% softening last year, reflecting a 5.8% contraction in the high volume sea segment, which overshadowed the 13.3% expansion in air visitors. Meanwhile, arrivals to the Grand Bahama market—comprising 11.1% of total visitors—remained constrained by the hurricane-related reduction in room capacity since 2016, as arrivals fell sharply by 29.1%, extending last year’s 1.9% contraction. Underpinning this outturn was a 48.1% reduction in the key air segment, together with a 25.7% falloff in sea passengers.

The ongoing weakness in the sector is expected to be more pronounced in September, given the disruption to travel itineraries caused by Hurricane Irma during the first half of the month. As a result of the storm, the Nassau Port, along with both the Lynden Pindling International Airport (LPIA) and Grand Bahama International Airport were closed, resulting in the cancellation of approximately 288 flights at LPIA. Reflecting this development, data released by the Nassau Airport Development Company Ltd. (NAD), showed a 22.7% reduction in passenger traffic in September, a reversal from a 1.7% gain in the previous year. The decline was led by a 23.2% contraction in U.S. departures, compared to a 2.2% increase in 2016, while non-U.S. international departures decreased by 20.5%, outstripping the prior year’s 0.8% falloff.


Data from the All Bahamas Retail Price Index showed a slight increase in the domestic inflation rate to 0.99% for the 12 months to August, from 0.15% in the comparable period of last year. This outturn was driven by accretions to average prices for housing, water, gas, electricity, and other fuels—accounting for more than one third of the index—and transport, by 3.2% and 2.7%, respectively, vis-à-vis reductions of 2.6% and 5.6% in the prior year. In addition, the rise in average costs for education quickened by 1.1 percentage points to 6.4%. In slight offsets, the inflation rates for both alcohol beverages, tobacco, & narcotics and clothing & footwear slowed by 2.7 percentage points to 1.0%, 0.2% respectively, while the increase in communication costs narrowed by 1.4 percentage points to 1.1%. Further, after rising by 9.2%, 5.2%, 3.0% and 2.4% in the prior period, the average prices for health, recreation & culture, restaurant & hotels and furnishing, household equipment & routine household maintenance, declined by 3.2%, 2.9%, 3.2%, and 0.6%, respectively, while food & non-alcoholic beverages and miscellaneous goods & services decreased by 1.0% and 0.8%, respectively, compared to gains of 1.9% and 1.8% in the previous year.

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