Quarterly Economic Review March 2022
Published: Wednesday June 15th, 2022
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the First Quarter of 2022. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period January to March.
Preliminary indications are that the Bahamian economy maintained its healthy recovery momentum during the first quarter of 2022, amid ongoing adjustment to the Novel Coronavirus (COVID-19). Tourism output continued to strengthen, buoyed by seasonal gains in both the high value-added stopover segment and the rebound in sea traffic, albeit remaining below pre-pandemic levels. Further, a number of small to medium-scale foreign investment-related projects, as well as ongoing post-hurricane rebuilding works, undergirded activity in the construction sector. In price developments, domestic inflation increased, reflective of the pass-through effects of higher international goods and oil prices.
Preliminary data for the third quarter of FY2021/22, showed that the Government’s overall deficit narrowed considerably, compared to the same quarter for FY2020/21. Underlying this outturn was a VAT-led increase in total revenue, which outweighed the growth in aggregate expenditure. Budgetary financing was secured from both external and domestic sources, including a mix of long and short-term debt instruments.
In monetary developments, bank liquidity expanded, as the growth in the deposit base, contrasted with the reduction in domestic credit. Similarly, the accumulation in external reserves was attributed to net foreign currency inflows from real sector activities, and the further receipt of proceeds from Government’s external borrowings. In addition, supported by loan write-offs and improving economic conditions, banks’ credit quality indicators improved during the review quarter. Further, the latest available data for the fourth quarter of 2021, revealed that domestic banks overall profitability levels increased, underpinned by a decline in operating costs and provisions for bad debt.
In the external sector, the estimated current account deficit narrowed markedly during the review quarter, owing to a considerably increase in the service account surplus, largely attributed to a recovery in tourism. Similarly, the financial account inflows expanded, bolstered by debt financed inflows to the Government. Meanwhile, the capital account transfers recorded nil transactions, vis-à-vis net receipts the previous year, which had included residual hurricane re-insurance inflows.
The report also features a review of financial services activity in 2021 and its contribution to the overall economy. The results of the survey indicated a reduction in balance sheet and fiduciary activities in 2021. Further, employment within the banking sector decrease, given ongoing consolidation of business operations. In addition, expenditure decline due largely to a falloff in operational costs. Nevertheless, the annual outcomes continue to indicate gains in value-added from expenditures in the economy, underpinned by a rise in taxes and Government fees. Meanwhile, the domestic insurance industry registered a growth in total assets. Similarly, for the securities industry, international assets under management increased marginally in 2021. However, credit unions recorded a modest falloff in balance sheet assets.
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