Quarterly Economic Review September 2022
Published: Tuesday December 13th, 2022
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Third Quarter of 2022. The Review provides an examination of the performance of the domestic economy, as well as sectoral developments, principally during the period July to September.
Preliminary indications are that, during the third quarter of 2022, the Bahamian economy sustained its recovery momentum from the adverse impact of the Novel Coronavirus (COVID-19) pandemic. Tourism output further improved, bolstered by gains in the high-value added air segment, as well as the rebound in sea arrivals, amid relaxed pandemic-related restrictions and the release of pent-up demand for travel in the key source markets. Further, construction output continued to be supported by several small to medium-scale foreign direct investment projects, and to a lesser extent, public sector post-hurricane reconstruction works. In price developments, domestic inflationary pressures remained elevated, underpinned by the pass-through effects of higher international oil prices and increased costs for other imported goods.
Provisional data showed that the Government’s overall deficit decreased notably for the first quarter of FY2022/23, vis-à-vis the same period of FY2021/22. Underpinning this outturn was a VAT-led rebound in total revenue, along with a reduction in aggregate expenditure. Budgetary financing was obtained largely from domestic sources, and featured a combination of long and short-term debt.
On the monetary front, banking liquidity expanded, as the buildup in the deposit base, contrasted with the decline in domestic credit during the review quarter. However, the seasonal increase in demand for foreign currency resulted in a decrease in external reserves. Meanwhile, banks’ credit quality indicators improved over the quarter, buoyed by ongoing loan write-offs and improving economic conditions. Similarly, domestic banks overall profitability for the second quarter—the latest available data—strengthened, attributed to reduced levels of provisioning for bad debts and lowered operating expenses.
In external sector developments, the estimated current account deficit narrowed over the review quarter, owing primarily to a widening in the services account surplus, which was led by a rebound in travel receipts. Contrastingly, reflecting the sharp reduction in other investment inflows and a reduced net private direct investments, the financial account inflows fell considerably. Further, estimated capital account transfers were nil during the third quarter, similar to the corresponding 2021 period.
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