Quarterly Economic Review December 2023
Published: Thursday February 29th, 2024
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the fourth quarter of 2023. The Review provides an examination of the performance of the domestic economy, as well as sectoral developments, principally during the period October to December.
The domestic economy’s growth momentum was sustained during the fourth quarter, although at a moderated pace, with economic indicators returning closer to the expected medium-term potential. Tourism earnings remained buoyant, supported by robust growth in both the high value-added air component and sea passengers, underpinned by aggressive promotion of the destination and the persistent demand for travel in key source markets. Further, a number of small to medium-scale foreign investment projects continued to provide stimulus to the construction sector. In price developments, domestic inflation moderated over the review quarter, reflective of the pass-through effects of lower global oil prices.
Preliminary estimates revealed that during the first quarter of FY2023/2024, the Government’s overall deficit widened marginally, vis-à-vis the comparative quarter of FY2022/2023. Contributing to this outturn, the rise in aggregate expenditure outstripped the growth in total revenue. Budgetary financing was obtained largely from internal sources and included a combination of long and short-term debt.
Monetary developments featured a contraction in bank liquidity, as the buildup in the deposit base trailed the growth in domestic credit. Further, external reserves decreased, amid the seasonal increase in demand for foreign currency during the latter half of the year. In addition, banks’ core credit quality indicators improved during the review quarter, given reduced non-performing loans, reflective of the sustained strengthening in the domestic economy and ongoing loan write-offs. Meanwhile, the latest available data for the third quarter, indicated a marginal decline in banks’ overall net income, led by a rise in provisioning for bad debt.
On the external side, the estimated current account deficit narrowed during the fourth quarter, as the services account surplus strengthened, undergirded by ongoing gains in tourism earnings. Further, the financial account inflow increased considerably, attributed to debt-financed inflows to the Government and heightened private sector activities. Meanwhile, the capital account transfers reported nil transactions, similar to a year earlier.
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