Monthly Economic and Financial Developments (MEFD) June 2024
Published: Monday July 29th, 2024
Domestic Economic Developments
Overview
During the month of June, preliminary economic indicators suggest that the domestic economy maintained its growth trajectory, albeit at a slower pace in comparison to 2023, as economic indicators continued to converge closer to their expected medium-term potential. Tourism output remained buoyant, supported by healthy gains in the high value-added air category and the sea segment, amid the persistent demand for travel in key source markets. In price developments, average consumer price inflation—as measured by changes in the average Retail Price Index (RPI) for The Bahamas—moderated during the 12 months to April 2024, vis-à-vis the same period in the preceding year, underpinned by the decrease in global oil prices. On the fiscal front, preliminary data on the Government’s budgetary operations for the first nine months of FY2023/24 revealed that the deficit narrowed vis-à-vis the comparative FY2022/23, as the growth in total revenue overshadowed the rise in aggregate expenditure. Monetary trends for the month of June were marked by a contraction in bank liquidity, as the reduction in the deposit base, outweighed the decline in domestic credit. Simialry, external reserves reduced, largely attributed to net foreign currency outflows through the private sector.
Real Sector
Tourism
Tourism metrics for the month June revealed that the sector’s output indicators continued to register healthy growth, bolstered by sustained gains in the high-value added air and in sea travel for all major ports of entry, as the demand for travel in key source markets persisted.
Official data provided by the Ministry of Tourism showed that total visitor arrivals strengthened to 0.90 million in May, relative to 0.76 million in the comparative 2023 period. Contributing to this outturn, the dominant sea segment expanded to 0.74 million visitors, compared to 0.61 million, a year earlier. Further, the high value air segment rose to 0.16 million visitors from 0.15 million passengers last year.
A breakdown by major port of entry indicated that total arrivals to New Providence expanded by 38.7% to 0.43 million visitors, relative to the previous year, as sea passengers grew by 56.4% to 0.31 million and air traffic, by 6.6% to 0.12 million. In addition, total arrivals to the Family Islands increased by 3.9% to 0.42 million, from a year earlier. Underlying this development, arrivals by sea rose by 4.0% to 0.38 million and air by 2.5% to 35,479, compared to the same period in 2023. Likewise, total arrivals to Grand Bahama increased to 47,020, from 42,710 in the preceding year, amid a 9.6% gain in sea passengers to 42,294 and a 14.2% rise in air traffic to 4,726.
On a year-to-date basis, total arrivals expanded by 13.5% to 4.8 million visitors, relative to the comparative 2023 period. Contributing to this outturn, sea and air arrivals rose by 15.7% and by 3.9% to 4.0 million and 0.8 million, respectively, undergirded by growth across all major market segments.
The most current data provided by the Nassau Airport Development Company Limited (NAD) revealed that total departures in June—net of domestic passengers—grew by 6.4% to 151,865, vis-à-vis the corresponding period last year. Specifically, U.S. departures increased by 6.4% to 135,397, while non-US departures rose by 7.0% to 16,468, relative to the previous year.
During the first half of the year, total outbound traffic expanded by 7.1% to approximately 0.9 million passengers. Specifically, US departures grew by 7.5% to 0.8 million, compared to the same period in 2023. Likewise, non-US departures advanced by 4.4% to 0.12 million, year-on-year.
As it relates to the short-term vacation rental market, data provided by AirDNA cemented these trends. Specifically, during the month of June, total room nights sold increased by 7.8% to 61,195, when compared to the same period last year. However, occupancy rates for entire place listings decreased to 56.8% from 59.2% in the prior year, and for hotel comparable listings to 47.5% from 48.5% in 2023. Meanwhile, as depicted in Graph 1, price indicators showed that the average daily room rate for entire place listings and hotel comparable listings firmed by 4.2% and by 0.6% to $709.18 and $187.60, respectively.
Prices
Average consumer price inflation—as measured by the All Bahamas Retail Price Index—slowed to 2.2% during the 12 months to April, from 5.6% in the same period of 2023. Underlying this development, the average costs for transport decreased by 6.0%, for communications by 5.5%, for clothing and footwear by 0.2%, after registering respective increases of 8.9%, 3.2%, and 3.5% a year earlier. Further, the average inflation moderated for restaurants and hotels (3.0%); food and non-alcoholic beverages (3.0%); and recreation and culture (0.7%). In an offset, average inflation quickened for health (7.4%); alcohol beverages, tobacco, and narcotics (5.5%); furnishing, household equipment, and routine household maintenance (4.9%); housing, water, gas, electricity and other fuels (4.6%); miscellaneous goods and services (3.8%); and education (3.2%).
Fiscal
Preliminary data on the Government’s budgetary operations for the first nine months of FY2023/24 revealed that the deficit narrowed to $214.2 million, from $249.7 million in FY2022/23. Underlying this development, total revenue increased by $112.4 million (5.4%) to $2,191.5 million, outstripping the $76.9 million (3.3%) rise in aggregate expenditure to $2,405.6 million.
The growth in revenue collections was primarily driven by a $136.9 million (7.5%) gain in tax receipts. Contributing, taxes on goods and services grew by $108.3 million (9.1%) to $1,302.7 million, as VAT receipts rose by $58.5 million (6.3%), to $993.9 million. In addition, excise tax receipts on goods and services accelerated to $16.7 million, from just $1.6 million in the previous fiscal year, while stamp tax on financial and real estate transactions advanced by $2.8 million (3.5%), to $82.5 million. Similarly, proceeds from international trade and transactions moved higher by $11.1 million (2.3%), to $502.3 million, on account of a 5.7% rise in departure taxes and 2.4% increase in customs & other import duties. Further, property taxes grew by $18.4 million (14.5%), to $145.6 million, attributed to the enhanced collection methods and enforcement measures employed by the government to lower arrears. Moreover, tax receipts from the use of goods/permission to use increased by $44.2 million (34.2%) to $173.4 million, reflective of a rise in proceeds from business licence fees (51.6%) and motor vehicle taxes (3.7%). In an offset, taxes on specific services (gaming taxes) reduced by $12.3 million (25.3%), to $36.3 million and general stamp taxes, by $1.0 million (15.3%) to $5.4 million. In contrast, non-tax revenue declined by $23.2 million (9.0%) to $235.4 million, explained by a $13.9 million (41.5%) reduction in reimbursements & repayments to $19.7 million and a $5.9 million (15.2%) decrease in property income to $33.0 million. Miscellaneous & unidentified receipts also reduced to a negligible $1.0 million from $26.6 million in the year prior.
As it relates to expenditure, recurrent spending grew by $35.9 million (1.7%) to $2,170.7 million. Underpinning this outturn, employee compensation rose by $34.9 million (5.9%) to $629.0 million, reflective of planned staff promotions, salary adjustments, and additional hires. Further, interest payments on public debt increased by $17.3 million (4.4%) to $409.1 million and disbursements for social assistance benefits, by $3.5 million (8.6%) to $44.2 million. In addition, allocations for pension and gratuities moved higher by $7.9 million (6.1%), to $137.4 million, while grants firmed by $2.1 million (35.0%) to $8.1 million. Providing some offset, outlays for various miscellaneous payments decreased by $12.1 million (5.8%) to $198.3 million, while spending for the use of goods & services was relatively unchanged at $431.7 million. Capital outlays also rose by $41.0 million (21.2%), to $235.0 million, attributed to a $26.9 million (16.1%) rise in spending on the acquisition of non-financial assets to $194.3 million, reflective of higher disbursements for other fixed assets, other structures, land improvements, and transport equipment. Further, capital transfers advanced by $14.1 million (53.0%) to $40.7 million.
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