Monthly Economic and Financial Developments, July 2011

Published: Tuesday August 30th, 2011

Preliminary indications are that the momentum of the recovery in the domestic economy was sustained during July. Anecdotal evidence on tourism sector performance suggests an improved outturn, after a relatively slow start to the year. In addition to the main United States market, where the group segment has shown signs of revival, sectoral improvements have been noted in the Latin American market, due to increased airline capacity. Construction output continued to benefit from a stable contribution from public sector infrastructural investments, alongside foreign investment related projects, led by the commencement of the “core” phase of the Baha Mar project.

Considerable slack remained in the labour market, although improving economic conditions have led to a reduction in the unemployment rate for the period ending May 2011, to 13.7% from 14.2% in May 2009. As reported by the Department of Statistics, the majority of the job gains over the last two years have been in the informal sector, and the number of discouraged workers was elevated by 34.8% to 11,900.

Despite the recent uptrend in international oil prices, energy costs declined over the review month. Average gasoline and diesel prices fell by 4.0% to $5.27 and 1.2% to $4.98, respectively in July; however, when compared to the same month of the previous year, the mean prices of gasoline and diesel were higher by 25.5% and 41.1%, respectively. In terms of electricity costs, the Bahamas Electricity Corporation’s fuel charge was stable, at 22.75 cents per kWh for July, but grew by 11.62 cents per kWh over last year.

In monetary developments, both banking sector liquidity and external reserves remained at above average levels. Given the ongoing sluggishness in economic activity and high unemployment levels, banks’ credit quality indicators deteriorated during the review month.

For full text reading, please download attached document.