Monthly Economic and Financial Developments (MEFD) October 2024

Published: Monday December 2nd, 2024

Domestic Economic Developments

Overview

During October, indications are that the domestic economy’s growth trajectory persisted, albeit at a slower pace relative to the previous year, with economic indicators continuing to normalise closer to their expected medium-term potential. Tourism output continued to record healthy gains, but at a moderated pace, supported by robust growth in the cruise component, as the stopover segment remained constrained by accommodation capacity. In price developments, average consumer price inflation—as measured by changes in the average Retail Price Index (RPI) for The Bahamas—declined during the 12 months to August 2024, vis-à-vis the corresponding 2023 period, owing to a decline in price pressures for imported fuel and other goods and services. Monetary sector developments featured more moderate decline in banking sector liquidity than the previous year, although the buildup in the deposit base exceeded the increase in domestic credit. Similarly, the reduction in external reserves slowed notably during the review month, primarily due to net foreign currency inflows through the public sector and a tapering in net seasonal outflows via the private sector.

Real Sector

Tourism

Monthly data suggest that the tourism sector continued to post healthy gains during the review month, although at a more tempered pace, given stopover capacity constraints.

According to the most recent data provided by the Nassau Airport Development Company Limited (NAD), total departures—net of domestic passengers—reduced by 11.1% to 90,900 in October compared to same period in 2023. Leading this outcome, U.S. departures contracted by 13.9% to 75,186. In a slight offset, international departures grew by 5.6% to 15,714 relative to the comparative period in the preceding year.

On a year-to-date basis, total outbound air traffic grew by 3.5% to 1.4 million, although markedly less than the 25.2% growth in the previous year. Specifically, U.S. departures increased by 3.6% to 1.2 million, while international departures rose by 2.9% to 0.2 million.

In the short-term vacation rental market, data provided by AirDNA, revealed that, total room nights sold increased by 2.6% to 30,478 in October, vis-à-vis the corresponding period last year. However, the occupancy rates for both hotel comparable and entire place listings decreased to 37.8% and 38.1%, respectively from 40.2% each in the corresponding period in the year prior. Further, as depicted in Graph 1, the average daily room rate (ADR) fell for hotel comparable listings by 4.5% to $163.58 and for entire place listings by 2.0%, to $605.55.

On a year-to-date basis, total room nights sold grew by 6.0%, reflecting increases in both hotel comparable bookings (7.2%) and entire place bookings (5.4%). However, occupancy levels for entire place and hotel comparable listings declined by 5.5% and 3.5%, respectively. Despite lower occupancy levels, the ADR moved higher for entire place listings (0.9%), and hotel comparable listings (0.5%).

Prices

Average consumer price inflation—as measured by the All Bahamas Retail Price Index—reduced to 1.3% during the twelve months to August 2024, relative to 4.4% in the comparable 2023 period. Contributing to this development, average costs declined for communication, by 7.3%, transport, by 4.6%, clothing & footwear, by 2.4%, and recreation & culture, by 2.2%, after recording gains in the preceding year. Further, average inflation moderated for health (5.3%); housing, water, gas, electricity & other fuels (2.8%); food & non-alcoholic beverages (2.5%); alcoholic beverages, tobacco, & narcotics (2.3%); restaurants & hotels (2.2%); and furnishing, household equipment, & routine household maintenance (1.5%). In contrast, inflation quickened for education (4.5%), and miscellaneous goods & services (3.6%).

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