Quarterly Economic Review September 2023
Published: Tuesday December 5th, 2023
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Third Quarter of 2023. 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 2023, the Bahamian economy sustained its growth trajectory, although at a moderated pace. As the recovery from the Novel Coronavirus (COVID-19) pandemic neared completion, growth indicators returned closer to their expected medium-term levels. Tourism output continued to record healthy gains, with the aggressive marketing efforts undertaken by the destination, bolstered ongoing improvements in earnings inflows, as the demand for travel in key source markets persisted. In addition, several small to medium-scale foreign direct investment projects provided support to the construction sector. In price developments, inflationary pressures eased during the twelve-months to August, despite remaining elevated, reflective of the tapering in global oil prices, relative to the same period last year.
Provisional data showed that the Government’s overall deficit narrowed during the fourth quarter of FY2022/23, compared to the same quarter for FY2021/22. Contributing to this outturn was a decrease in aggregate expenditure, combined with an increase in total revenue. Budgetary financing was sourced from both the domestic and external markets, with a larger portion from the former and included a mix of long and short-term debt.
In monetary developments, bank liquidity contracted during the review quarter, as the reduction in the deposit base, contrasted with the growth in domestic credit. Further, reflective of the seasonal increase in demand for foreign currency, external reserves declined. Meanwhile, banks’ credit quality indicators improved over the review quarter, underpinned by the sustained strengthening in the domestic economy and ongoing loan write-offs. Similarly, domestic banks overall profitability for the second quarter—latest available data—grew, largely attributed to a rise in banks’ overall interest income.
In external sector developments, the estimated current account deficit widened during the third quarter, on account of an increase in the merchandise trade deficit, and higher primary and secondary income outflows, which outweighed the growth in the services account surplus. Further, underpinned by a shift in portfolio investment transactions to a net outflow, from a net inflow the year prior, the financial account inflows contracted. Meanwhile, the capital account transfers recorded nil transactions during the review quarter, similar to the comparative 2022 period.
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