Quarterly Economic Review, June 2017
Published: Monday September 25th, 2017
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the second quarter of 2017. The review provides an examination of the domestic economy’s performance, as well as sectoral developments—principally during the period April to June.
Indications are that domestic economic activity was mildly positive during the second quarter of 2017, underpinned by foreign investment projects, and to a lesser extent public sector rebuilding activity, which supported construction sector output; although the tourism sector remained relatively weak.
The fiscal performance for the eleven months of FY2016/2017 indicated a widening in the overall deficit, as hurricane recovery-led capital expenditure gains, outpaced the growth in total revenue. Budgetary financing was obtained mainly from domestic sources, and comprised a mix of both long and short-term funding.
In monetary developments, with the expansion in deposits outpacing the gains in domestic credit, bank liquidity increased during the review quarter; however, the growth in external reserves slowed, attributed to a rise in public sector demand for foreign currency. Meanwhile, amid some increase in delinquency rates, banks’ credit quality indicators deteriorated. Further, banks’ overall profitability levels contracted during the first quarter of 2017, owing to a reduction in the net interest margin and an increase in core operating costs.
On the external side, the estimated current account deficit widened significantly during the second quarter. Underlying this outturn was a sharp deterioration in the merchandise trade deficit, as the growth in imports outstripped the rise in exports, while the services account surplus contracted and net current transfer outflows increased markedly. Further, the surplus on the capital and financial account declined, due in part to a significant reduction in public sector net external borrowing activities.
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