Monthly Economic and Financial Developments, December 2006

Published: Monday January 1st, 2007

The expansion in economic activity was sustained during December, reflecting continued firming in private sector demand as evidenced by an increase in credit, as well as robust growth in the construction sector in response to both residential and commercial investments.

With regards to the tourism sector, information available for the hotel sector over the first ten months of the year showed that room revenues firmed by 4.9%, attributed to broad-based gains in all major markets. Specifically, room revenues in Nassau, Grand Bahama and the Family Islands improved by 4.3%, 9.5% and 3.8%, respectively.

For the year, the rate of increase in average consumer prices eased slightly to 1.84% from 1.95% in 2005, although strengthened cost upturns were registered for other goods and services (6.74%), food and beverages (4.68%) and furniture and household operations (2.02%). These were moderated by average cost declines for transportation and communication costs (1.97%), education (0.44%) and recreation and entertainment services (0.15%).

Preliminary data on the Government’s fiscal performance during the first six months of FY2006/07 featured continued gains in revenue receipts, which outpaced the advance in expenditures, leading to an improvement in the overall deficit by 62.9% to $26.4 million. Total revenue rose by 14.8% to an estimated $625.9 million, reflecting a 12.3% increase in tax revenues, while elevated accretions to fines, forfeits and other income sources, buoyed non-tax revenues by 56.3%. On the expenditure side, increases in both current (2.5%) and capital (28.2%) spending augmented total outlays by 5.9% to an estimated $652.3 million.

In capital market developments, BISX added the Fidelity Prime Income Fund Limited (FPI) to its list of mutual funds traded during the month of December, bringing the total domestic mutual funds listed on the Exchange to six. The Fund is managed by Fidelity Merchant Bank and Trust and is comprised of Bahamian dollar fixed income securities.

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