Quarterly Economic Review, September 2016

Published: Wednesday December 21st, 2016

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Third Quarter of 2016. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period July to September.

Preliminary information suggests that domestic economic conditions remained mildly positive during the third quarter of 2016, as foreign investment projects provided impetus to the construction sector, while tourism sector activity benefitted from the hosting of a number of international events. Domestic inflationary pressures were well contained, despite a recent pick-up in international oil prices. 

The fiscal position featured a widening in the deficit during the first quarter of FY2016/2017, as broad-based expenditure gains outstripped the growth in total revenue. Funding for the shortfall was sourced mainly from the domestic market, while additional debt creating investment financing was also extended to two private entities. 

In the monetary sector, both bank liquidity and external reserves contracted during the review period, reflecting the seasonal increase in demand for foreign currency. Although some deterioration in banks’ credit quality indicators occurred over the review period, the sector’s capital adequacy ratio remained well above regulatory requirements, while banks’ second quarter profitability levels improved due lower operational and provisioning costs. 

Partial estimates suggests that that the current account deficit widened during the third quarter, reflecting a reduction in the services account surplus, while the balance on the capital and financial account reversed to a deficit from a surplus in the prior year, due mainly to a significant increase in net “miscellaneous” outflows; however net direct investment inflows expanded.

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