Advance Release of Domestic Economic Developments, 3rd Quarter 2006

Published: Monday January 8th, 2007

Indications are that the strengthening in the Bahamian economy observed in the first half of the year was maintained during the third quarter, reinforced by a continuation of strong consumer demand. Construction output also expanded as bank lending supported increased housing investments; however, weakness in both air and sea arrivals suggested a softening in tourism output. In the fiscal sector, extraordinary gains in tax revenues supported a turnaround in the overall balance, to a modest surplus for the first quarter of FY2006/07. Monetary developments featured sustained expansion in credit and a concomitant tightening in bank liquidity and decline in external reserves. On the external side, the estimated current account deficit widened, mainly linked to a decline in tourism inflows; however, the capital and financial account surplus improved, on account of increased funding of tourism related investments by overseas and domestic sources.