Quarterly Economic Review December 2024
Published: Wednesday February 26th, 2025
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the fourth quarter of 2024. The Review provides an examination of the performance of the domestic economy, as well as sectoral developments, principally during the period October to December.
The domestic economy maintained its positive growth trajectory during the fourth quarter, albeit at a moderated pace, as economic indicators continued to normalize closer to their expected medium-term potential. While tourism output remained at a healthy level, undergirded by robust gains in sea visitors, the high value-added stopover segment continued to face capacity accommodation constraints. Further, a number of small to medium-scale foreign investment-related projects provided support to the construction sector. In price developments, domestic inflation slowed, underpinned by the pass-through effects of lower global oil prices on imported oil and other goods.
Preliminary estimates for the second quarter of FY2024/25 showed that the Government’s deficit widened relative to the same quarter of FY2023/24. Underlying this outcome was an expansion in aggregate expenditure, which overshadowed the growth in total revenue. Budgetary financing was secured from both domestic and external sources, but was led by internal borrowings and comprised of a mix of long and short-term debt instruments.
In monetary developments, bank liquidity contracted, as the expansion in domestic credit outpaced the rise in the deposit base. Further, the banking system’s net foreign assets reduced over the review period, reflective of the seasonal increase in demand for foreign currency. In addition, banks’ credit quality indicators continued to improve, in an environment of sustained gains in economic activity. Meanwhile, profitability indicators for the third quarter—the latest available data—showed a rise in banks’ overall net income, owing primarily to an increase in other income and a reduction in provisioning for bad debt.
In the external sector, the estimated current account deficit narrowed during the fourth quarter, benefitting from an increase in the services account surplus, bolstered by robust gains in tourism earnings. Further, the financial account inflows—excluding reserve assets—grew, on account of inflows from “other” investment activities, largely an expansion in currency and deposits. Meanwhile, the estimated capital account transfers reported nil transactions during the fourth quarter, similar to the preceding year.
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