Monthly Economic and Financial Developments, December 2011
Published: Friday February 3rd, 2012
Indications are that the domestic economy maintained a positive, although mild, growth momentum, during the month of December. More favourable foreign investment activity, alongside ongoing public sector infrastructure projects, buoyed construction output and the tourism sector benefitted from stronger seasonal hotel earnings. The central Government’s overall deficit contracted over the first five months of FY2011/12, occasioned by an increase in revenues and a marginal decline in expenditures. In the monetary sector, liquidity and external reserves rose modestly, supported by net foreign currency inflows arising partly from foreign investment and Government’s financing activities.
Preliminary evidence suggests that tourism sector output continued to strengthen in December. The 28.5% surge in sea passengers, alongside a more moderate 7.7% advance in air arrivals, led to higher growth of 23.8% in overall tourists, relative to 1.7% in 2010. The Family Island market showed the largest increase in visitors (34.1%), buoyed by gains in the sea (38.3%) and air (4.3%) segments. Visitors to New Providence firmed by 21.4%, with a greater rise of 27.4% in the sea component; compared with the 7.5% hike in air visitors. Grand Bahama recorded a more modest 9.8% improvement in arrivals, reflecting gains in air passengers and sea tourists, of 15.9%, and 8.6%, respectively.
For 2011, growth in total visitor arrivals slackened to 6.3% from a 13.1% hike in 2010, with the 9.1% expansion in the larger sea segment outweighing the 2.1% reduction in air visitors. In terms of the major markets, tourists to New Providence—which accounted for the bulk (53.8%) of total arrivals—rose by 2.8%, due entirely to a 5.0% gain in sea traffic, as air passengers fell by 1.6%. Similar conditions prevailed in Grand Bahama (14.6% of the market), as the 7.7% expansion in sea arrivals offset a 12.2% falloff in the air component, for a 4.8% upturn in the total. Visitors to the Family Islands—at 31.6% of overall arrivals—strengthened by 13.7%, extending the 11.7% increase of the prior year, as sea passengers advanced by 15.5% and air arrivals rose by 1.2%.
Consistent with the gains in stopovers, hotel performance data from a sample of properties in Nassau and Paradise Island showed room revenues for December advancing by 6.5% over the comparable period a year earlier. Underpinning this outturn was a 3.3 percentage point gain in the occupancy rate to 58.3%, accompanied by a $3.55 increase in the average daily room rate to $270.65. Similar gains were reported for the entire year, with the 3.1% hike in room revenues linked to a 1.3 percentage point advance in average occupancy rates to 63.9%, and a 1.9% firming in the average daily room rate to $236.26. However, the growth was not broad-based, as only half of the properties recorded improvements in earnings, and total room revenues were still 8.9% lower than the comparative 2008 level.
Data on the central Government’s fiscal operations for the first five months of FY2011/12 showed a $38.8 million (20.1%) reduction in the deficit to $154.0 million, relative to the comparable period a year earlier. Total revenue grew by $18.6 million (4.0%) to $485.0 million, the bulk of which was attributed to tax revenue. In particular, higher excise tax receipts supported an $8.7 million (3.6%) upturn in taxes on international trade; business & professional fees firmed by almost two-thirds to $17.6 million, owing to an increase in “general” business fees; and tax receipts from property sales elevated other “miscellaneous” taxes, by $2.3 million (1.7%). Non-tax revenue rose marginally by $0.2 million (0.4%) to $58.8 million.
Total expenditure contracted by $20.2 million (3.1%) to $693.0 million, as a public corporation’s partial repayment of outstanding debt lowered the Government’s net lending to public bodies, by $24.8 million in contrast to a year earlier increase of $19.8 million. Capital spending decreased by $7.2 million (10.6%) to $60.5 million. Outlays for asset acquisitions, which fell by $8.6 million (56.5%), reverted to trend levels, following a one-off land-related increase a year earlier. In contrast, current expenditure grew by $31.5 million (5.5%) to $603.3 million, buoyed by a $29.3 million (28.4%) advance in purchases of goods & services—driven by higher outlays for insurance-related payments—and more modest increases in wages & salaries, by $3.4 million (1.5%). Transfer payments were lower by $1.2 million (0.5%).
For full text reading, please download the attached document.
