Monthly Economic and Financial Developments (MEFD) September 2024
Published: Monday November 4th, 2024
Domestic Economic Developments
Overview
Economic indicators suggest that the domestic economy growth momentum moderated during the month of September, as economic indicators continued to normalize closer to their expected medium-term potential. Tourism continued to record healthy output levels, but at a tempered pace, with the cruise segment expanding at a faster rate than the more dominant stopover market. 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 July 2024, relative to the comparative 2023 period, due to a reduction in price pressures for imported fuel and other goods and services. On the fiscal front, provisional data on the Government’s budgetary operations for FY2023/24 showed that the deficit narrowed relative to FY2022/23, underpinned by the growth in total revenue, combined with a reduction in aggregate expenditure. Monetary trends during the month of September were marked by a contraction in banking sector liquidity, as the rise in domestic credit contrasted with the reduction in the deposit base. Likewise, external reserves declined during the review month, owing to net foreign currency outflows through the private and public sectors.
Real Sector
Tourism
Initial data revealed that the tourism sector gains during the review month, were reflected more robustly in the cruise market. Conversely, stopover was more constrained by accommodation capacity, as well as partially disrupted by the busier than-normal early start to the hurricane season, despite any direct impact on the archipelago.
According to data from the Ministry of Tourism, total arrivals strengthened to 0.9 million visitors in August, compared to 0.7 million visitors in the corresponding 2023 period. Contributing to this outcome, sea passengers rose by 24.8% to 0.8 million. However, air arrivals declined by 3.5% to 0.1 million visitors, reflecting a moderation in bookings, amid the increased hurricane season activity.
A breakdown by major port of entry revealed that total arrivals to New Providence expanded by 26.3% to 0.4 million visitors, vis-à-vis the same period
in the previous year. Underlying these developments, sea passengers strengthened by 41.1% to 0.3 million, overshadowing the 4.4% falloff in air traffic to 0.1 million. Further, arrivals to the Family Islands grew by 18.9% to 0.4 million, led by a 20.2% expansion in sea traffic, to 0.4 million, which overshadowed the 4.1% falloff in air visitors to 18,543. In contrast, total arrivals to Grand Bahama decreased by 15.0% to 41,885 when compared to the same period in the prior year, as the 18.2% reduction in sea passengers to 37,666 eclipsed the 29.9% growth in air passengers to 4,219.
On a year-to-date basis, total arrivals expanded by 15.8% to 7.7 million visitors, relative to the comparative 2023 period. Underlying this development, sea traffic moved higher by 19.0% to 6.4 million, while air passengers rose by 2.1% to 1.3 million (see Table 1).
The most recent data provided by the Nassau Airport Development Company Limited (NAD) revealed that total departures in September—net of domestic passengers—declined by 5.5% to 78,576, relative to the same period last year. In particular, U.S. departures reduced by 7.1% to 65,344. However, international departures increased by 3.8% to 13,232 vis-à-vis the corresponding period in the previous year.
On a year-to-date basis, total outbound air traffic grew by 4.7% to 1.3 million, albeit notably lower than the 25.7% expansion in 2023. In particular, U.S. departures rose by 5.0% to 1.1 million, and international departures, by 2.7% to 0.2 million.
As it relates to the short-term vacation rental market, data provided by AirDNA showed that in September, total room nights sold fell by 1.3% to 24,921, when compared to the same period last year. Correspondingly, occupancy rates for entire place listings decreased to 29.1% from 32.7% in the comparative period last year, and for hotel comparable listings, to 34.0% from 36.0% in 2023. Meanwhile, as shown in Graph 1, price indicators revealed that the average daily room rate (ADR) for entire place listings declined by 5.1% to $588.53, and for hotel comparable listings, by 9.2% to $157.17.
On a year-to-date basis, total room nights sold rose by 6.2%, supported by gains in both entire place bookings (5.8%) and hotel comparable bookings (7.3%). Meanwhile, occupancy levels for entire place and hotel comparable listings moderated by 5.5% and by 3.2%, respectively. Despite lower occupancy levels, the ADR for entire place listings edged up by 1.2% and for hotel comparable listings, by 1.0%.
Fiscal
Provisional data on the Government’s budgetary operations for FY2023/24 showed that the deficit narrowed to $186.7 million from $533.8 million in FY2022/23. Contributing to this outturn, total revenue grew by $220.2 million (7.7%) to $3,075.6 million, while aggregate expenditure reduced by $127.0 million (3.7%) to $3,262.3 million.
Revenue growth was led by a $269.5 million (10.9%) increase in tax receipts. Specifically, taxes on goods and services rose by $178.6 million (11.0%) to $1,807.6 million, as VAT receipts expanded by $101.3 million (8.1%), to $1,353.4 million, underpinned by the ongoing strengthening in economic activity. Further, proceeds from financial & realty stamp taxes grew by $1.8 million (1.7%), to $108.8 million. In addition, receipts from international trade and transactions—inclusive of exports, customs & other import duties and departure taxes—increased by $49.8 million (7.4%) to $725.2 million, relative to the prior fiscal year. In addition, property tax collections rose by $41.7 million (25.8%) to $203.2 million. Meanwhile, revenue from general stamp taxes reduced by $0.6 million (7.7%) to $7.1 million. In contrast, non-tax revenue decreased by $48.1 million (12.6%) to $332.5 million, as miscellaneous & unidentified revenue reduced by $50.4 million (92.0%) to $4.4 million, while property income fell by $17.6 million (27.3%) to $46.9 million. Reimbursements & repayments also decreased to $35.1 million, relative to $44.2 million in the prior year. Conversely, proceeds from the sale of goods and services moved higher by $27.2 million (12.9%) to $238.4 million, underpinned by broad-based gains in fees & service charges. Further, collections from fines, penalties & forfeits increased by 13.7% to $6.1 million, while sales of other non-financial assets, advanced to $1.7 million from a mere $0.5 million a year earlier.
As it relates to expenditure, recurrent spending declined by $101.1 million (3.3%) to $2,960.7 million. The outcome was driven by a reduction in payments for the use of goods and services by $110.9 million (16.5%) to $560.8 million. Similarly, subsidies decreased by $52.1 million (11.2%) to $412.6 million, owing primarily to lower outlays to public non-financial corporations. Further, other “miscellaneous” payments reduced by $34.7 million (11.1%) to $278.0 million, led by a falloff in current transfers. In contrast, employee compensation grew by $38.1 million (4.7%) to $843.3 million, while interest payments moved higher by $40.0 million (7.0%) to $613.1 million. In addition, social assistance benefits rose by $16.5 million (7.2%) to $243.8 million.
Capital expenditure also fell by $25.9 million (7.9%), to $301.5 million. This was attributed to a $31.8 million (11.3%) reduction in the acquisition of non-financial assets. However, capital transfers advanced by $5.9 million (13.0%) to $51.4 million.
Prices
Average consumer price inflation—as measured by the All Bahamas Retail Price Index—fell to 1.5% during the twelve months to July, from 4.8% in the comparative 2023 period. Underpinning this outcome, average costs decreased for communication by 7.0%, transport, by 5.1%, clothing & footwear, by 2.4% and recreation & culture by 1.8%, after posting increases in the previous year. In addition, average inflation slowed for housing, water, gas electricity & other fuels (3.3%); alcoholic beverages, tobacco & narcotics (3.2%); food and non-alcoholic beverages (2.6%); restaurant & hotels (2.4%); and furnishing, household equipment, & routine household maintenance (2.4%). Providing some offset, inflation quickened for health (5.9%), education (4.1%), and miscellaneous goods & services (3.8%).
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