News

Monthly Economic and Financial Developments, April 2018

Published: Monday June 4th, 2018

Overview

Indications are that the modest growth in the Bahamian economy was sustained during the month of April, benefitting from an improvement in tourism output, while varied-scale foreign investment projects continued to support construction activity. Inflationary pressures were well contained over the review period; although domestic energy costs trended upwards, due to the ongoing supply-led gains in global oil prices. The fiscal deficit narrowed over the nine months of FY2017/18, mainly reflecting a decline in capital outlays and an increase in tax revenue. Monetary sector developments featured growth in deposits—fueled by net foreign currency inflows from real sector activities––in contrast to a reduction domestic credit, with both liquidity and external reserves correspondingly boosted.

Real Sector Tourism

Preliminary information suggests that tourism output rose during the first quarter, as the sector benefitted from a number of factors, including: the increase in high-end room capacity, intensified marketing campaigns, along with severe winter weather in several key source markets. Data from the Ministry of Tourism showed a 2.8% improvement in total arrivals, vis-à-vis a 2.2% decline in the prior period. This outturn reflected an 18.0% expansion in the high value-added air segment, a reversal from the previous year’s 9.4% contraction. Meanwhile, sea arrivals decreased by 1.0%, following a 0.2% softening a year ago.

An analysis by first port of entry, revealed that air visitors to New Providence surged by 19.5%; however, a 9.1% falloff in the dominant sea component, led to a 1.8% decline in total tourist arrivals, vis-à-vis 2017’s 7.3% gain. In contrast, the Grand Bahama market expanded by 5.1%, relative to a 16.6% contraction in the previous year, as the 6.3% increase in sea arrivals, outpaced the 4.9% contraction in air traffic. Gains in both air and sea visitors, by 19.4% and 9.0% respectively, occasioned the 10.4% increase in Family Island tourists, overturning the prior year’s 11.0% contraction.

In line with the expansion in the high value-added air component, hotel performance indicators—based on a survey of large properties within New Providence—improved over the first quarter, as total room revenue grew by 39.0%. This outturn reflected a 26.0% increase in room nights sold and a 10.9% gain in the Average Daily Room Rate (ADR) to $273.59.

Indications are that the positive tourism industry trends were sustained during the month of April, as partial data from the Nassau Airport Development Company Ltd. (NAD), showed a 7.9% expansion in total departures—excluding domestic passengers—outpacing the 4.4% gain in the prior year. In terms of the components, US passengers grew by 6.8%, surpassing 2017’s 2.3% advance; while non-U.S. international departures, rose further by 14.3% compared to17.9% in the prior year.

Prices

Recent energy cost pressures continued to heighten inflation trends. During April, domestic fuel prices sustained their upward trajectory, as the cost of both diesel and gasoline rose by 3.8% and 0.7% to $4.37 and $4.52, per gallon, respectively. Similarly, on a year-on-year basis, both diesel and gasoline prices strengthened, by 13.8% and 7.4%, respectively.

Fiscal Sector

Data on the Government’s budgetary operations for the nine months of FY2017/18, revealed an $88.4 million (31.6%) reduction in the deficit to $191.6 million. This reflected an $80.3 million (4.6%) decline in total expenditure to $1,657.4 million, coupled with an $8.1 million (0.6%) increase in total revenue to $1,465.9 million.

The contraction in total expenditure was underpinned by a $114.3 million (50.3%) decline in capital spending to $113.1 million, as infrastructure outlays fell sharply, by $85.4 million to $95.9 million, following the hurricane rebuilding-related expansion in the prior year. Further, asset acquisitions decreased by $28.9 million (62.6%) to $17.3 million. In contrast, current expenditure grew by $34.2 million (2.3%) to $1,544.4 million, primarily backed by a $40.3 million (5.2%) gain in consumption spending. A breakdown of the components showed that both personal emoluments and purchases of goods and services firmed, by $19.8 million (3.8%) and $20.5 million (7.8%), respectively. In a slight offset, transfer payments fell by $6.0 million (0.8%), as the $16.3 million (3.1%) falloff in subsidies & other transfers, surpassed the $10.2 million (5.0%) uptick in interest expenses.

With regard to revenue, the gain in aggregate receipts reflected an $11.9 million (0.9%) increase in tax collections to $1,320.1 million. Specifically, value added taxes (VAT) firmed by $12.0 million (2.6%) and selective taxes on services rose by $5.7 million (26.2%). Meanwhile, other “miscellaneous” tax receipts expanded by $22.6 million (7.3%), inclusive of increases in the motor vehicle tax, departure tax and “other” stamp tax categories by $7.0 million (39.7%), $1.7 million (1.8%) and $1.0 million (1.2%), respectively. In contrast, taxes on international trade contracted by $22.3 million (5.6%), linked to a $19.1 million (9.0%) fall in import taxes, while business & professional fees were reduced by $6.6 million (5.9%). Further, non-tax revenue declined by $3.9 million (2.6%), led by a timing-related decrease in income, by $15.3 million (37.7%).

For full text reading, please download the attached document.

Search News

Search News using the form below. Leave the keyword field empty for a list of all entries in the selected category.


Separate keywords by commas.

News