Monthly Economic and Financial Developments (MEFD) June 2023

Published: Monday July 31st, 2023

Amended: Thursday August 3rd, 2023

Domestic Economic Developments

Overview

During the month of June, preliminary economic indicators suggest that the domestic economy sustained its growth momentum, albeit at a moderate pace, as recovery from the COVID-19 pandemic neared completion. Tourism sector output remained buoyant, supported by healthy growth in both the high value-added air segment and the sea component, as the demand for travel in the key source markets persisted. In price developments, average consumer price inflation—as measured by changes in the average Retail Price Index (RPI) for The Bahamas—firmed during the twelve months to April, 2023, reflective of the pass-through effects of higher prices on imported oil and other goods. Monetary trends for the month of June were marked by a modest expansion in banking sector liquidity, despite the buildup in the deposit base trailing the growth in domestic credit. However, external reserves decreased during the review month, attributed to net foreign currency outflows through the public sector.

Real Sector

Tourism

Initial data suggested that tourism sustained its robust growth in June, undergirded by buoyant gains in both the high-value air component and sea traffic. The outcome reflected significantly, the closure of the remaining seasonal gap in stopover and cruise visitor, as compared to what still existed on average in the first half of last year.

Official data provided by the Ministry of Tourism (MOT) revealed that total visitor arrivals rose to 0.8 million in June, from 0.6 million in the same period in 2022. Specifically, the dominant sea segment grew to 0.6 million, from 0.4 million passengers in the previous year. In addition, air traffic increased to 0.2 million, from 0.1 million—representing 99.6% of the pre-pandemic high that was recorded in 2019.

Disaggregated by major port of entry, total arrivals to New Providence strengthened to 0.4 million visitors, from 0.3 million in the preceding year. Underlying this outcome, the sea and air components stabilised at 0.2 million and 0.1 million visitors, respectively. Further, traffic to the Family Islands advanced to 0.4 million, from 0.3 million in the prior year, as sea and air arrivals rose to 0.3 million and 37,682, respectively. In addition, arrivals to Grand Bahama totalled 43,572, surpassing the 35,720 registered in the previous year, as respective air and sea passengers measured 4,545 and 39,027.

On a year-to-date basis, total arrivals recovered to 5.0 million visitors, vis-à-vis 3.0 million in the corresponding 2022 period. Supporting this outcome, air arrivals grew to 1.0 million passengers, from 0.8 million in the prior year, reflecting gains in all major markets. Likewise, sea arrivals accelerated to 4.1 million, from 2.3 million visitors in the previous year (see Table 1) Disaggregated by major port of entry, total arrivals to New Providence strengthened to 0.4 million visitors, from 0.3 million in the preceding year. Underlying this outcome, the sea and air components stabilised at 0.2 million and 0.1 million visitors, respectively. Further, traffic to the Family Islands advanced to 0.4 million, from 0.3 million in the prior year, as sea and air arrivals rose to 0.3 million and 37,682, respectively. In addition, arrivals to Grand Bahama totalled 43,572, surpassing the 35,720 registered in the previous year, as respective air and sea passengers measured 4,545 and 39,027.

On a year-to-date basis, total arrivals recovered to 5.0 million visitors, vis-à-vis 3.0 million in the corresponding 2022 period. Supporting this outcome, air arrivals grew to 1.0 million passengers, from 0.8 million in the prior year, reflecting gains in all major markets. Likewise, sea arrivals accelerated to 4.1 million, from 2.3 million visitors in the previous year.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) revealed that total departures in June—net of domestic passengers—rose by 20.1% to 142,692, vis-à-vis the comparative period last year. Specifically, U.S. departures increased by 20.9% to 127,307, while non-U.S departures advanced by 13.9% to 15,385, relative to the previous year. During the first half of the year, total outbound traffic grew by 31.0% to 827,160 passengers. In particular, U.S. departures expanded by 30.9% to 709,481 visitors, compared to the corresponding period last year. Likewise, non-U.S. departures rose by 31.5% to 117,679 visitors, relative to the same period a year earlier. Comparatively, the half year volume of air arrivals approximated 98.0% of the pre-pandemic and pre-Hurricane Dorian highs, while sea visitor volumes were stabilised at levels surpassing the previous heights by 40.0%.

In the short-term vacation rental market, data provided by AirDNA cemented the positive trends in tourism output. Specifically, for the month of June, total room nights sold rose to 196,825 from 154,036 in the comparative period of 2022. Correspondingly, the occupancy rates for both entire place and hotel comparable listings firmed to 64.5% and 57.9%, respectively, from 58.7% and 51.3% in the previous year. Further, price indicators showed that year-over-year, the average daily room rate (ADR) for entire place listings increased by 6.9% to $576.46 and for hotel comparable listings, by 5.3% to $202.51.

Prices

Average domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—firmed to 5.6% during the twelve months to April, from 3.8% in the corresponding 2022 period, reflective of the pass-through effects of higher international oil prices and other costlier imports. Specifically, average costs increased for recreation & culture (16.9%) and miscellaneous goods & services (0.9%), after registering reductions in the previous year. Further, average inflation accelerated for food & non-alcoholic beverages (12.7%), restaurant & hotels (11.1%), health (5.0%), and housing, water, gas, electricity & other fuels (4.5%). Providing some offset, average inflation moderated for transport (8.9%), clothing & footwear (3.5%), alcohol beverages, tobacco & narcotics (3.4%), communication (3.2%), furnishing, household equipment & routine household maintenance (1.8%) and education (1.4%).

 

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