Quarterly Economic Review, December 2017
Published: Monday March 12th, 2018
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the fourth quarter of 2017. The review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period October to December.
Indications are that the domestic economy maintained its mildly positive growth path during the final quarter of 2017, supported by an improvement in the tourism sector, following the severe hurricane-related setback in the prior year. Favourable momentum was also provided from the increase in room capacity from the scaling-up of operations at the multi-billion dollar Baha Mar resort. In addition, foreign investment-related activity, and to a lesser extent ongoing post-hurricane rebuilding work, provided support to the construction sector. Labour market conditions continued to gradually improve; although the seasonal increase in the labour force due to the influx of new graduates, contributed to an uptick in the unemployment rate over the six months to November, however, the jobless rate declined, year-on-year. Domestic inflationary pressures remained contained, although the recent rise in international oil prices resulted in a firming in the rate in the review quarter.
In fiscal developments, the deficit narrowed considerably during the second quarter of FY2017/2018, owing to a capital spending-led reduction in total expenditure, combined with an increase in aggregate revenue. Financing of the deficit was obtained mainly from external sources—including a $750.0 million external bond issue.
On the monetary front, both bank liquidity and external reserves expanded robustly, buoyed by the receipt of net proceeds from the Government’s external borrowing activities. Banks’ credit quality indicators improved in the fourth quarter, due to entities’ sustained credit restructuring measures and loan write-offs. The sector’s capital adequacy ratio also continued to exceed regulatory requirements.
Provisional estimates indicated that the current account deficit widened significantly in the fourth quarter, vis-à-vis prior year, when hurricane-related re-insurance inflows were received. In contrast, the surplus on the capital and financial account increased, bolstered by proceeds from the Government’s external bond issue.
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