Monthly Economic and Financial Developments, June 2007

Published: Friday August 3rd, 2007

Preliminary data indicate that the expansion in the Bahamian economy was sustained during the month of June, buoyed by demand stimulus from private sector credit expansion and healthy foreign investment inflows, which countered softening in tourism activity.

Comparative data for the first five months of 2007 revealed a 6.0% reduction in tourist arrivals from the same period last year, as air and sea traffic declined by 6.8% and 5.6%, respectively. Weakness in the key stopover market was most pronounced for the United States, but inclusive of the European segment, which combined to overshadow robust growth from the Canadian, Latin American and Caribbean markets. All of the major ports of entry experienced shortfalls, with Grand Bahama noting the largest contraction of 12.9%, due to respective declines of 16.2% and 5.3% in sea and air arrivals. In New Providence, an 8.7% falloff in air visitors coupled with a 4.6% reduction in sea passengers, caused a 6.2% decrease in overall arrivals. Also, the Family Islands recorded a 1.7% reduction in visitors, owing to a 2.3% decline in sea traffic, which eclipsed a 0.9% improvement in air visitors.

Hotel sector indicators through the first quarter of the year, suggest a less pronounced weakening in industry earnings relative to the estimated reduction in stopover visitors, as improvements in average room rates partly cushioned lower occupancy levels. Data revealed that estimated room revenues at major resort properties declined by 5.5%, with losses in Grand Bahama and New Providence at 19.2% and 3.3%, respectively. In contrast, Family Island room revenues rose by 4.0%.

Retail price inflation during the twelve months ending June 2007 firmed to 2.43% from 1.63% a year ago, amid the continuing influence of rising oil prices. Increases in average costs were most notable for food & beverages (4.18%) and recreation entertainment & services (3.21%).

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