Monthly Economic and Financial Developments (MEFD) September 2023

Published: Monday October 30th, 2023

Domestic Economic Developments

Overview

During the month of September, preliminary economic indicators suggest that the domestic economy sustained its growth momentum, although at a moderated pace. As recovery from the COVID-19 pandemic reached completion, the pace of output expansion converged closer to the economy’s medium-term potential. Tourism output continued to record robust growth, undergirded by healthy gains in both the high value-added air component and sea traffic, as the demand for travel in 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—rose slightly during the twelve months to July, 2023, reflective of the pass-through effects of higher prices on imported oil and other goods. Monetary developments for the month of September featured a reduction in banking sector liquidity, as the growth in domestic credit, contrasted with the contraction in the deposit base. Further, during the review month, external reserves declined, attributed to a rise in net foreign currency outflows through the private and public sectors.

Real Sector

Tourism

Initial data suggested that monthly tourism sector activity maintained buoyancy, undergirded by robust gains in both the high-value air traffic and sea segment, reflective of the ongoing demand for travel in key source markets and supportive marketing efforts.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) revealed that total departures in September—net of domestic passengers—grew by 12.2% to 0.08 million, vis-à-vis the comparative 2022 period. In particular, U.S. departures rose by 11.7% to 0.07 million, while non-U.S departures increased by 14.8% to 0.01 million, relative to the same period last year. On a year-to-date basis, total outbound traffic expanded by 25.7% to approximately 1.2 million passengers. Specifically, U.S. departures advanced by 25.7% to nearly 1.1 million visitors, relative to the same period a year earlier. Likewise, non-U.S. departures moved higher by 25.2% to 0.2 million visitors, compared to the corresponding period last year.

As it relates to the short term vacation rental market, data provided by AirDNA mirrored the positive trends. During September, total room nights sold grew to 122,844 from 98,238 in the corresponding 2022 period. Contributing to this outturn, the occupancy rates for both entire place and hotel comparable listings rose to 51.8% and 50.1%, respectively, vis-a-vis 47.6% and 47.8% in the prior year. Further, price indicators revealed that year-over-year, the average daily room rate (ADR) for entire place listings increased by 14.7% to $568.91 and for hotel comparable listings, by 10.8% to $198.63.

On a year-to-date basis, total room nights sold rose by 29.7%, attributed to gains in both entire place bookings (29.0%) and hotel comparable bookings (35.5%). Likewise, occupancy levels for entire place listings and hotel comparable listings firmed by 10.4% and by 12.5%, respectively. Further, ADR for the respective entire place and hotel comparable listings imporved by 9.4% and by 5.6%.

Prices

Average domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—increased marginally to 4.8% during the twelve months to July, from 4.7% in the same period of 2022, reflective of the pass-through effects of higher global oil prices and other costlier imports. Specifically, average costs for recreation & culture and for food & non-alcoholic beverages accelerated to 15.5% and 10.4%, respectively, from 3.7% and 8.0% in the previous year. Further, inflation quickened for restaurant & hotels (8.5%), alcohol beverages, tobacco & narcotics (6.1%), health (5.7%), housing, water, gas, electricity & other fuels (4.8%), and furnishing, household equipment & routine household maintenance (3.4%); and average prices for miscellaneous goods & services firmed by 1.3%, following a 1.5% decline in 2022. Providing some offset, the rise in average costs moderated for transport (4.3%), clothing & footwear (2.8%), education (1.2%) and communication (0.8%).

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