Quarterly Economic Review June 2023
Published: Wednesday September 13th, 2023
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2023. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period April to June.
During the second quarter of 2023, indications are that the domestic economy sustained its positive growth momentum, albeit at a moderated pace, with indicators reverting to pre-pandemic levels. Tourism output continued to record robust growth, supported by healthy gains in both the high value-added air segment and sea traffic, as the demand for travel in major source markets persisted. Further, a number of small to medium-scale foreign investment projects, and ongoing public sector post-hurricane rebuilding works, undergirded activity in the construction sector. In price developments, inflationary pressures remained elevated, reflective of the pass-through effects of higher prices on imported oil and goods.
Preliminary estimates revealed that for the first nine months of FY2022/2023, the Government’s overall deficit narrowed, relative to the same period of FY2021/2022. Underlying this development, the growth in total revenue outstripped the rise in aggregate expenditure. Budgetary financing was obtained mainly from domestic sources, including a mix of long and short-term debt instruments.
Monetary developments featured a slight decrease in bank liquidity during the review quarter, with the expansion in domestic credit outstripping the rise in the deposit base. Growth in external reserves moderated sharply, relative to the same period last year, which had included the receipt of proceeds from the Government’s external borrowing activities. Meanwhile, banks’ credit quality indicators improved in the second quarter, supported by improving economic conditions and ongoing loan write-offs. In addition, the latest available data for the first quarter of 2023, showed that domestic banks’ overall profitability strengthened, buoyed by an expansion in interest income.
On the external side, the estimated current account deficit narrowed during the second quarter, attributed to an increase in the services account surplus, from continued strengthening in tourism earnings. In contrast, the financial account inflows reduced, explained by a reversal in the portfolio investment position to a net outflow, from a net inflow a year earlier, combined with a falloff in net private direct investments. Meanwhile, the capital account transfers reported nil transactions, similar to a year earlier.
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