Monthly Economic and Financial Developments, October 2005

Published: Tuesday November 29th, 2005

Domestic economic developments for the month of October highlighted continued expansion in the construction sector, alongside robust growth in private sector demand as evidenced by increased mortgage and consumer lending. Indications are that the slowdown in tourism output experienced over the first nine months of the year, continued in October as a result of the passage of Hurricane Wilma. However, growth in the Bahamian economy over the January to October period was buttressed by robust domestic consumption expenditures, expansionary conditions in residential construction activity and ongoing tourism investments.

Year-to-date tourism statistics up to September 2005 indicated a contraction in arrivals of 3.1% to 3,773,862 for the entire Bahamas. Compared to the year-earlier period, air visitors rose by a modest 1.7%, but were offset by a 5.1% decline in sea arrivals. The downturn was concentrated in Grand Bahama where overall visitors decreased by 19.9%, with both air and sea tourists declining by 30.3% and 13.2%, respectively. Arrivals to the Family Islands were reduced by 2.4%, with the 3.1% reduction in sea visitors outpacing a 0.8% increase in air visitors. Developments in the tourism sector continue to be aided by the positive performance of New Providence, where the 11.8% hike in air arrivals offset the 4.2% falloff in sea visitors for a 1.2% gain in overall arrivals.

Domestic prices for the 12-months ending October 2005 rose by 2.07% from 1.08%, with average cost hikes for medical care & health, transportation & communication, food & beverage, and education services.

Preliminary estimates for Government’s budgetary operations for the first quarter of FY2005/06 reflected a reduction in the overall deficit to $20.4 million from $47.3 million in the same quarter for FY2004/05. Improved revenue collection measures and heightened import demand led to a 23.5% increase in total tax receipts to $251.7 million, while combined non-tax and capital revenue earnings rose more than two-fold to $20.1 million. Total expenditure moved higher by 12.3% over last year’s $292.2 million, due to increases in both current and capital expenditures.

In domestic financial developments, on October 17, 2005, Consolidated Water Co. Ltd., based in the Cayman Islands, commenced its Bahamian Depositary Receipts (“BDRs�) offering, representing 650,000 ordinary common shares, to the Bahamian public. Fidelity Capital Markets Limited is acting as placement agent for the company. The offering expires November 4, 2005 and the company plans to raise $11.2 million for the construction of a new seawater desalination plant and expansion of its existing plant in New Providence.

Please click the link below for further information.