Monthly Economic and Financial Developments (MEFD) January 2025

Published: Monday March 3rd, 2025

Domestic Economic Developments

Overview

Preliminary indications are that the domestic economy grew at a moderated pace in January, as compared to the same period in the previous year, converging closer to its expected medium-term growth potential. Tourism output reflected healthy, but moderated activity, as the high value-added stopover segment continued to experience capacity constraints. In price developments, average consumer price inflation, as measured by changes in the average Retail Price Index (RPI) for The Bahamas, declined in the eleven months to November 2024—the latest available data—owing to decreased price pressures from imported fuel and other goods and services. On the fiscal front, preliminary data on the Government’s budgetary operations for the second quarter of FY2024/25 showed that the deficit widened relative to the same quarter in FY2023/24, as the growth in aggregate expenditure outstripped the rise in total revenue. Monetary trends for January were marked by a reduction in banking sector liquidity, despite the growth in domestic credit trailing the buildup in the deposit base. However, external reserves expanded, underpinned by net foreign currency inflows through the private sector.

Real Sector

Tourism

Initial data showed that the tourism sector continued to record healthy growth, although at a tempered pace, due to accommodation capacity constraints in the stopover segment.

Official data provided by the Ministry of Tourism revealed that total visitor arrivals rose by 14.0% to 1.2 million visitors in December 2024, compared to the 1.0 million in the corresponding period in the previous year. Supporting this outcome, sea passengers increased by 17.0% to 1.0 million. Conversely, air traffic fell by 0.9% to 0.2 million.

An analysis by major port of entry revealed that total arrivals to New Providence grew by 4.5% to 0.5 million, relative to the same period in 2023. Underlying this outturn, sea visitors expanded by 6.8% to 0.4 million, outstripping the 2.2% falloff in air traffic to 0.1 million. Further, arrivals to the Family Islands expanded by 21.9% to 0.6 million, owing to a 23.3% growth in sea visitors to 0.5 million and a 3.4% rise in air passengers to 33,812. In addition, total arrivals to Grand Bahama grew by 33.3% to 70,522, underpinned by a 37.4% expansion in sea passengers to 64,609 and a 0.8% uptick in air arrivals to 5,913.

On an annual basis, total arrivals grew to an historic 11.2 million in 2024, from 9.7 million in 2023. Leading this outturn, sea passengers expanded by 19.7% to 9.5 million. However, air arrivals decreased by slightly by 0.2% to 1.7 million.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) indicated that total departures—net of domestic passengers—declined by 4.6% to 137,974 in January, vis-à-vis the comparative period last year. Specifically, U.S. departures fell by 4.8% to 116,773. Likewise, international departures decreased by 3.6% to 21,201 compared to the same period in 2024.

In the short-term vacation rental market, data provided by AirDNA showed that total room nights sold rose by 2.3% to 50,575 in January 2025, compared to the same period in 2024. Further, the average daily room rates (ADR) for both entire place and hotel comparable listings increased by 6.6% to $684.86 and by 3.6% to $187.24, respectively. However, the occupancy rate for entire place listings fell by 4.4 percentage points to 39.7%. Similarly, the occupancy rate for hotel comparable listings declined by 1.1 percentage points, to 41.0%.

Fiscal

Provisional data on the Government’s budgetary operations for the second quarter of FY2024/25 indicated that the deficit expanded to $209.3 million from $197.2 million in the comparative fiscal year period. Supporting this outcome, aggregate expenditure increased by $135.6 million (16.2%) to $971.4 million, outpacing the $123.5 million (18.6%) rise in total revenue to $762.1 million.

The growth in revenue collections was underpinned by a $113.6 million (18.8%) increase in tax receipts. In particular, taxes on international trade and transactions grew by $63.6 million (39.4%) to $225.1 million, supported by a more than two-fold rise in departure taxes to $93.7 million from $35.2 million in year prior. Further, proceeds from export duties rose by $4.6 million (7.5%) to $65.5 million. Similarly, taxes on goods and services expanded by $33.2 million (8.8%) to $410.9 million, mainly reflective of the $19.5 million (6.3%) boost in VAT receipts to $327.6 million, combined with a $1.0 million (3.8%) gain in stamp taxes on financial and realty transactions, to $27.8 million. Specific taxes—mainly gaming—also increased by $5.5 million (45.2%) to $17.7 million and excise taxes, by $1.3 million (79.7%) to $3.0 million. Taxes on the use of goods and services moved higher by $5.9 million (20.4%) to $34.8 million, owing largely to a rise in receipts from business license fees (28.1%), company taxes (20.8%) and motor vehicle taxes (8.2%). In addition, property taxes advanced by $17.4 million (67.0%) to $43.3 million.

Non-tax revenue increased by $9.8 million (13.4%) to $82.7 million, due to a $6.1 million (10.5%) growth in proceeds from the sale of goods and services to $64.0 million, bolstered mainly by a rise in receipts from immigration (17.3%), customs (9.2%) and port and harbour fees (66.34%). Further, collections from property income grew by $3.4 million (25.6%) to $16.8 million from the year prior. Moreover, revenue from fines, penalties and forfeitures rose by $0.5 million (37.5%) to $1.8 million and the sale of other non-financial assets, by $0.2 million (72.5%) to $0.4 million. By contrast, miscellaneous & unidentified revenue and reimbursements & repayments declined to negligible levels.

In terms of expenditure, recurrent spending expanded by $108.8 million (14.2%) to $875.1 million. Contributing to this outturn, payments for the use of goods and services increased by $55.2 million (41.6%) to $188.0 million and public debt interest payments firmed by $36.0 million (19.3%) to $223.0 million. In addition, disbursements for personal emoluments grew by $8.7 million (4.2%) to $217.9 million, while other “miscellaneous” payments moved higher by $6.2 million (9.3%) to $72.3 million. Likewise, subsidies advanced by $6.1 million (5.6%) to $116.1 million, largely due to a rise in outlays to public corporations, which overshadowed the decline to private enterprises. In addition, grants firmed by $1.3 million to $0.2 million in the preceding year. Providing some offset, social benefits declined by $4.7 million (7.7%) to $56.5 million, relative to the same period a year earlier. Meanwhile, capital expenditure grew by $26.9 million (38.7%) to $96.3 million, underpinned by a $23.5 million increase in capital transfers to $29.0 million, and a $3.3 million (5.2%) rise in the acquisition of non-financial assets to $67.2 million.

Prices

Average consumer price inflation—as measured by the All Bahamas Retail Price Index—slowed to 0.6% during the twelve months to November 2024, from 3.4% in the comparative 2023 period. Underlying this development, average costs declined for clothing & footwear by 2.9% and recreation & culture, by 1.7%, after posting gains in the preceding year. Moreover, average prices decreased further for communications (6.6%) and transportation (3.0%). In addition, average inflation moderated for health (3.6%), food & non-alcoholic beverages (2.7%), alcoholic beverages, tobacco, and narcotics (2.0%), housing, water, gas, electricity & other fuels (0.9%), restaurants & hotels (0.7%) and furnishing, household equipment & routine household maintenance (0.6%). In a slight offset, inflation quickened for education (3.2%) and miscellaneous goods and services (3.1%).

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