Monthly Economic and Financial Developments (MEFD) November 2020

Published: Monday December 21st, 2020

Domestic Economic Developments

Overview

Domestic economic developments during the month of November continued to be adversely impacted by the Novel Coronavirus (COVID-19) pandemic. Specifically, tourism sector activity remained contracted as globally imposed travel restrictions largely eliminated both the high value-added air component and sea traffic. However, the construction sector was undergirded by ongoing foreign direct investment projects, along with post-Hurricane reconstruction work. On the monetary front, the growth in bank liquidity slowed during November, as the expansion in domestic credit, contrasted with the reduction in the deposit base. Further, external reserves decreased during the review month, mainly on account of the falloff in foreign currency inflows from real sector activities.

Real Sector

Tourism

Tourism sector activity remained contracted during the month of October, as global travel restrictions associated with COVID-19 resulted in both air and sea arrivals grounding to a halt.

Official data provided by the Ministry of Tourism (MOT) revealed that, total foreign arrivals reduced by 98.4% in October, contrasting with a 6.6% growth a year earlier. In particular, air visitors decreased by 92.7%, extending last year’s 11.4% decline. Similarly, sea traffic fell by 99.5%, in comparison to a 10.7% gain in 2019.

A breakdown by major islands, showed that in New Providence total arrivals were only 0.9% of the prior year’s outturn, underpinned by significant reductions in both sea (99.8%) and air (96.9%) arrivals.  For Grand Bahama total visitors matched just 5.6% of the 2019 volumes, as air arrivals reached 62.1% of the previous year’s levels. Similarly, visitors to the Family Islands corresponded to 2.3% of the prior year’s volumes, with air arrivals matching 34.5% of the 2019 levels. 

On a year-to-date basis, total foreign arrivals contracted by 70.5%, a turnaround from the 10.2% expansion in the previous year. Underlying this outcome was a 73.4% reduction in air arrivals, vis-à-vis a 10.1% growth in 2019. Similarly, sea passengers reduced by 69.6%, relative to a 10.2% increase last year. 

The latest data provided by the Nassau Airport Development Company Limited (NAD) revealed that for the month of November, total international departures decreased to 9,777 passengers, contrasting with a 0.8% uptick to 110,848 in 2019. On a year-to-date basis, outward-bound traffic fell sharply by 73.1%, a reversal from the 13.1% gain in the prior year. By destination, the U.S component reduced significantly by 74.1%, a turnaround from the 14.3% expansion in 2019. Likewise, the non-U.S. international component declined by 66.9%, vis-à-vis a 5.9% increase a year earlier. 

Short-term rental market data, provided by AirDNA, featured positive movements during the month of November, supported by domestic demand. Specifically, total room nights sold rose by 49.7%, surpassing the 36.1% increase in the prior year, bolstered by advancements in entire place accommodations by 52.1% and hotel comparable listings by 45.5%. Pricing data revealed the average daily room rate (ADR) for both entire place listings and hotel comparable listings grew by 22.2% and 13.9%, to $451.26 and $163.62, respectively. Domestic spending also stemmed the cumulative losses, when compared to the hotel sector.  Over the eleven-month period, total room nights sold declined by 46.4%, as bookings for entire place listings were lower by 47.5% and hotel comparable bookings contracted by 36.7%. Pricing indicator outcomes were mixed, as the ADR for entire place listings rose by 4.0% to $406.43, while the ADR for hotel comparable listings fell by 1.2% to $152.02.

Prices

Reflective of the pass through effects of declining global oil prices, domestic consumer price inflation—as measured by changes in the average Retail Price Index for The Bahamas—narrowed to 0.2% during the twelve months to October, from 2.6% a year earlier. An analysis by category showed that average prices for transport and clothing & footwear both declined by 1.3% each, following increases in the prior year. Similarly, after registering a gain in 2019, the average cost for housing, water, gas, electricity & other fuels decreased by 1.2%. Further, the average price reduction for communication widened to 2.4% from 2.1% in the previous year. In addition, the average inflation rate moderated for restaurants & hotels (4.8%), alcohol beverages, tobacco & narcotics (3.7%), furnishing, household equipment & maintenance (2.0%) and miscellaneous goods and services (1.2%). Providing some offset, the rise in average costs quickened for health (6.9%), food & non-alcoholic beverages (1.2%) and recreation & culture (0.5%), while the average price decline for education slowed to 3.1%.

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