Monthly Economic and Financial Developments (MEFD) November 2024

Published: Friday December 20th, 2024

Domestic Economic Developments

Overview

Provisional data suggest that during November, the domestic economy sustained its growth momentum, albeit at a tempered pace compared to the preceding year.  In particular, economic indicators continued to trend closer to their expected medium-term trajectory. Tourism sector activity continued to expand—although at a slowed pace—as strong growth in the cruise segment contrasted with accommodation capacity constraints in the high value-added stopover component. In price developments, average consumer price inflation—as measured by changes in the average Retail Price Index (RPI) for The Bahamas—slowed during the 12 months to September 2024, relative to the comparative 2023 period, reflective of a moderation in price pressures for imported fuel and other goods and services. On the fiscal front, preliminarydata on the Government’s budgetary operations for FY2024/25 showed that the deficit widened vis-à-vis the same quarter in FY2023/24, as the growth in aggregate expenditure overshadowed the rise in total revenue. Monetary sector trends were marked by an expansion in bank liquidity, despite the growth in domestic credit exceeding the buildup in the deposit base. Meanwhile, the decline in external reserves moderated considerably, owing primarily to net foreign currency inflows through the private sector, which offset net public sector outflows.

Real Sector

Tourism​

During the review month, the tourism sector continued to expand, although at a more moderated pace, reflective of robust gains in the cruise market, as opposed to constrained stopovers capacity.

According to the latest data from the Ministry of Tourism, total arrivals expanded to 0.7 million visitors in October, from 0.6 million in the comparative 2023 period. Underlying this development, the dominant sea component grew by 25.2% to 0.7 million. In contrast, the high value-added air segment decreased by 9.4% to 83,263 visitors. 

A disaggregation by major port of entry revealed that total arrivals to New Providence increased by 27.5% to 0.3 million in October, compared to the same period last year.Contributing to this outturn, sea arrivals grew by 41.7% to 0.3 million; however, air traffic declined by 9.3% to 69,109 from the year earlier. In addition, arrivals to the Family Islands strengthened by 19.2% to 0.4 million, relative to the preceding year, led by a 20.9% expansion in sea traffic to 0.4 million, which contrasted with the 17.0% contraction in air traffic to 11,036. 

Providing some offset, total visitors to Grand Bahama decreased by 27.6% to 27,605 vis-à-vis the prior year, as sea arrivals fell by 31.5% to 24,487, overshadowing the 29.3% growth in the air component to 3,118.

On a year-to-date basis, total arrivals grew by 16.6% to 9.1 million, in comparison to the previous year. Reflecting this outcome, sea traffic advanced by 20.2% to 7.0 million, while air passengers rose by just 0.2% to 1.4 million. 

The most recent data provided by the Nassau Airport Development Company Limited (NAD) showed that total departures—net of domestic passengers—decreased by 4.0% to 113,739 in November, as compared to the same period last year. Specifically, U.S. departures fell by 5.9% to 94,994. However, international departures increased by 6.5% to 18,745, relative to the comparative period of the prior year. 

On a year to date basis, total outbound air traffic strengthened by 2.9% to 1.5 million, albeit notably lower than the 23.9% rise in the comparative 2023 period. In particular, USdepartures increased by 2.8% to 1.3 million, while non-U.S. departures grew by 3.2% to 0.2 million.

As it relates to the short-term vacation rental market, estimated inflows strengthened. Data provided by AirDNA indicated that total room nights sold grew by 4.0% to 42,937in November, relative to the same period in the preceding year. Meanwhile, the average daily room rate (ADR) for entire place listings rose by 7.5% to $725.38. In contrast, the average daily room rate (ADR) for hotel comparable listings declined by 0.7% to $185.60.  However, given increased inventory, the average occupancy rate for hotel comparable listings decreased to 45.6%, from 48.8% last year. Similarly, the occupancy rate for entire place listings moved lower to 48.2%, from 50.1% in the previous year. 

On a year-to-date basis, total room nights sold rose by 5.8%, attributed to gains in both hotel comparable bookings (7.3%)and entire place bookings (5.2%). Moreover, the ADR for entire place listings improved by 1.5%, while the rate for hotel comparable listings edged up by 0.4%.  However, the occupancy rates for entire place and hotel comparable listingsfell by 5.3% and by 3.8%, respectively.

Fiscal

Provisional data on the Government’s budgetary operations for the first quarter of FY2024/25 indicated that the deficit widened to $185.4 million, from $61.5 million in the same period last year. Contributing to this outturn, aggregate expenditure increased by $142.6 million (19.7%) to $867.7 million, overshadowing the $18.7 million (2.8%) growth in total revenue to $682.2 million. 

The gain in revenue collections was led by a $12.5 million (2.1%) rise in tax receipts. In particular, taxes on international trade and transactions advanced by $15.2 million (8.8%) to $187.2 million relative to the same period last year, underpinned by a $26.4 million (53.3%) expansion in departure taxes to $75.9 million and a $3.3 million (5.3%) increase in customs and import duties to $64.5 million. In addition, tax revenue from the use or supply of goods & services moved higher by $9.5 million (50.6%) to $28.3million, on account of a rise in proceeds from business licence fees (84.8%), company (74.4%) and motor vehicle (1.6%)taxes. Further, property taxes grew by $4.0 million (18.7%) to $25.4 million. In an offset, taxes on goods and services fell by $5.3 million (1.3%) to $403.5 million, reflective of no receipts from specific taxes—mainly gaming—and a falloff in collections from excise taxes, by $13.4 million (97.4%) to $0.4 million, which overshadowed the increase in collections from stamp taxes on financial and realty transactions (23.5%) and VAT receipts (0.4%). Moreover, general stamp taxes decreased by $1.4 million (89.5%) to $0.2 million. 

Non-tax revenue rose by $6.2 million (10.4%) to $66.0 million, attributed to a $4.3 million (7.9%) increase in proceeds from the sale of goods and services to $59.3 million, explained by a rise in receipts from immigration, customs and “other” fees. Collections from property income also advanced to $5.0 million from just $1.5 million a year earlier. Further, revenue from fines, penalties and forfeits and the sale of other non-financial assets stabilized at $1.4 million and $0.4 million, respectively, relative to the first quarter of FY2023/24. In contrast, miscellaneous & unidentified revenue and reimbursements & repayments declined to negligible levels.

In terms of expenditure, recurrent spending expanded by $83.5 million (12.6%) to $743.9 million. Reflective of this development, payments for the use of goods and services grew by $39.6 million (33.2%), while other “miscellaneous” payments rose by $26.3 million (40.5%). In addition, subsidies moved higher by $10.5 million (11.1%) to $104.3 million, owing to a rise in outlays to public corporations and the private sector. Likewise, employee compensation increased by $8.2 million (3.9%) to $216.7 million. Further, grants firmed by $0.5 million (65.5%) to $1.3 million and social benefits, by $0.2 million (0.3%) to $59.5 million. Providing some offset, interest payments reduced by $1.7 million (1.5%) to $112.4 million vis-à-vis the same quarter of the previous year. Capital expenditure also rose by $59.1 million (91.5%) to $123.8 million, driven by a $51.7 million (98.2%) increase in the acquisition of non-financial assets. Similarly, capital transfers grew by $7.4 million (61.8%) to $19.5 million during the first quarter of the new fiscal period.

Prices 

Average consumer price inflation—as measured by the AllBahamas Retail Price Index—slowed to 1.2% during the twelve months to September 2024, compared to 3.9% in the same 2023 period. Contributing to this outturn, average costs declined for clothing & footwear, by 2.7% and recreation & culture, by 2.2%, after posting gains in the year prior. In addition, average prices fell for communications (7.7%) and transport (3.9%), extending the previous year’s reduction. Further, average inflation slowed for health (5.2%); food & non-alcoholic beverages (2.2%); alcohol beverages, tobacco, & narcotics (2.2%); housing, water, gas, electricity, and other fuels (2.2%); restaurant & hotels (1.7%); and furnishing, household equipment, & routine household maintenance (1.4%). Providing some offset, inflation quickened for education (4.1%), and miscellaneous goods and services (3.5%).

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