Monthly Economic and Financial Developments (MEFD) January 2023

Published: Monday February 27th, 2023

Domestic Economic Developments

Overview

Preliminary economic indicators suggest that the growth momentum in the domestic economy persisted during the month of January, continuing to recover from the adverse impact of the Novel Coronavirus (COVID-19) pandemic. Tourism sector output further strengthened, underpinned by gains in the high value-added air segment and the rebound in sea traffic, reflective of the relaxed pandemic restrictions and pent-up demand for travel in key source markets. In price developments, the domestic inflation rate rose in 2022, against the backdrop of higher international oil prices. Monetary sector developments were marked by moderated gains in banking sector liquidity, even though the contraction in the deposit base outpaced the reduction in domestic credit. Neverthlesss, external reserves declined, attributed to net foreign currency outflows through the public sector.

Real Sector

Tourism

Monthly data revealed that the tourism sector sustained its robust growth trajectory in January, with output exceeding pre-pandemic levels, amid relaxed COVID-19 conditions and pent-up demand for travel in key source markets.

Official data provided by the Ministry of Tourism (MOT) showed that total passenger arrivals expanded to 0.9 million in December, from 0.5 million visitors in the corresponding period of 2021. Specifically, the dominant sea segment almost doubled to 0.7 million, vis-à-vis 0.4 million visitors in the previous year. In addition, air traffic grew to 0.2 million from 0.1 million a year earlier—surpassing pre-pandemic levels; representing 112.9% of air arrivals recorded in 2019.

Disaggregated by major ports of entry, total arrivals to New Providence increased to 0.4 million from 0.2 million in the prior year. Underlying this outcome, the air and sea segments both advanced to 0.1 million and 0.3 million visitors, from 0.09 million and 0.1 million, respectively in 2022. Further, foreign arrivals to the Family Islands amounted to 0.4 million visitors, compared to 0.3 million in the previous year, as air and sea visitors rose to 0.03 million and 0.4 million, respectively. Similarly, Grand Bahama attracted 0.06 million visitors, exceeding the 12,355 registered in the prior year, attributed to gains in both the air and sea segments.

On an annual basis, total arrivals rebounded to 7.0 million—the first time since 2019—from 2.1 million in 2021, when a 17.1% growth was recorded. Contributing to this outturn, air arrivals advanced to 1.5 million, extending the 111.9% gain in the prior year, bolstered by increases in all major source markets. Similarly, sea arrivals recovered to 5.5 million visitors, following an 11.8% decline in 2021.

The positive trend persisted, as the most recent data provided by the Nassau Airport Development Company Limited (NAD) revealed that total departures—net of domestic passengers—grew by two-thirds to 128,165 in January, vis-à-vis the comparative period last year. In particular, U.S. departures expanded by two-thirds to 107,237, while non-U.S. departures nearly doubled to 20,928 from the corresponding month of 2022.

In the short-term vacation rental market, data provided by AirDNA further cemented trends. Specifically, for the month of January, total room nights sold rose to 147,633 from 113,559 a year earlier. Underlying this outturn, the occupancy rates for both entire place and hotel comparable listings increased to 56.6% and 55.7%, respectively, compared to 50.8% and 47.9% in the prior year. Further, price indicators showed that year-over-year, the average daily room rate (ADR) for entire place grew by 8.6% to $524.73 and hotel comparable listings, by 4.9% to $186.54.

Prices

Average domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—rose to 5.6% in 2022, from 2.9% in 2021, on account of the pass-through effects of higher global oil prices. Specifically, average costs increased for recreation & culture by 12.8%, after registering a reduction in the previous year. Further, average inflation accelerated for food & non-alcoholic beverages (13.5%), restaurant & hotels (12.4%), transport (12.3%) and communication (8.0%). Similarly, average costs increases quickened for health (5.7%) and housing, water, gas, electricity & other fuels (3.3%); while the decline in average prices for miscellaneous goods & services slowed to 0.4% from 0.7% the previous year. Providing some offset, the average inflation moderated for clothing & footwear (2.9%), education (1.6%) and furnishing, household and equipment (1.2%). Further, average costs for alcohol beverages, tobacco & narcotics decreased by 0.5%, following a gain of 5.2% in 2021.

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