Monthly Economic and Financial Developments (MEFD) June 2021

Published: Tuesday August 3rd, 2021

Domestic Economic Developments

Overview

During the month of June, domestic economic developments continued to be influenced by the Novel Coronavirus (COVID-19) pandemic. Nevertheless, despite ongoing globally imposed travel restrictions, the tourism sector showed signs of a slow recovery, with an uptick in the high value-added air component, and the gradual resumption of sea traffic, due to increased vaccination efforts. The half-year however, performance still lagged 2020, owing to the growth momentum experienced before the pandemic struck. Meanwhile, varied scale foreign investment-led projects, combined with post-hurricane rebuilding works, provided continued stimulus to the construction sector. Monetary developments in June recorded a build-up in bank liquidity, as the growth in the deposit base contrasted with the contraction in domestic credit. Moreover, external reserves grew, bolstered by net foreign currency inflows from Government’s external borrowings and modest net foreign currency inflows through the private sector.

Real Sector

Tourism

Preliminary evidence suggests that monthly tourism output showed signs of recovery, although continuing to face headwinds, as internationally imposed travel restrictions, associated with the COVID-19 pandemic, contributed to depressed air and sea traffic. Nonetheless, domestic demand continued to provide support to the vacation rental market.

Official data provided by the Ministry of Tourism (MOT) showed that total foreign arrivals by first port of entry resumed at 93,876 during the month of May, from virtually nil in the same period in 2020, when international border closures and lockdowns were fully enforced. Underlying this outcome, air traffic measured 81,168 compared to just 20 in the preceding year—and recovered to only 51.1% of 2019 arrivals. Meanwhile, sea traffic reached 12,708 vis-à-vis nil passengers a year earlier.

A disaggregation by major port of entry revealed that arrivals to New Providence reached 55,568, representing air traffic of 54,264; while sea passengers reached 1,304 relative to no visitors in 2020. Likewise, visitors to Grand Bahama totalled 4,290 following the virtual absence of tourists during the same period last year. Underlying this outturn, sea and air arrivals totalled 2,314 and 1,976 respectively. In addition, traffic to the Family Islands measured 34,018 visitors, from a nil outturn in 2020, as the air and sea segments posted arrivals of 24,928 and 9,090, respectively.

On a year-to-date basis, the tourism sector still maintained a significant visitor deficit, down by 83.6% from the first half of 2020, which also reflected a 47.5% decline. As cruise activity remained paused, sea passengers reduced by 97.5%, relative to the 44.3% decrease in 2020. However, the falloff in air arrivals tapered to 29.8% from 57.2% in the comparable period of the prior year. Table 1 depicts total visitor arrivals by Island over the five-month period, with only the Family Islands registering growth in air arrivals.

Data from the Nassau Airport Development Company Limited (NAD) revealed that total departures—net of domestic passengers— recovered to 84,559 in June, from just 1,006 in the corresponding 2020 period, as the borders were effectively shut in the same month last year. In particular, U.S. departures were registered at 81,906 versus 690 in the prior year. Further, the non-U.S. segment totaled 2,653 vis-à-vis 316 passengers in the same period of the previous year. During the first half of the year, the reduction in outward bound traffic moderated to 30.4% from 57.6% a year earlier. In terms of the components, the dominant non-U.S. category declined by 20.1%, slowing from the 58.7% falloff last year. In contrast, the decrease in non-U.S. departures widened to 82.7% from 51.0% in the prior year.

Short-term rental data provided by AirDNA showed a moderation in the gains in the vacation rental market. Specifically, total room nights sold advanced by 16.5%, albeit a slowdown from the 19.5% increase in the same month in the previous year. In the underlying developments, the rise in bookings for entire place listings and hotel comparable listings moderated to 17.7% and 6.0%, from 20.4% and 12.8% last year, respectively. Meanwhile, the average daily room rate (ADR) for respective entire place listings and hotel comparable listings rose by 1.9% and by 0.4%, to $500.19 and $178.20.

On a year-to-date basis, total room nights sold rose by 19.5%, amid growth in bookings for entire place listings (21.8%) and in private room listings (2.3%). As depicted in graph 1, pricing data showed that the ADR for both entire place listings and hotel comparable listings grew by 17.0% and by 8.0%, to $473.66 and $167.78, respectively.

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