Quarterly Economic Review, September 2019
Published: Monday December 16th, 2019
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the third quarter of 2019. The Review provides an examination of the performance of the domestic economy, as well as sectoral developments, principally during the period July to September.
During the third quarter, domestic economic developments were dominated by the passage of Hurricane Dorian, which disrupted tourism output, as well as the Government's fiscal consolidation efforts. However, several varied-scaled foreign investment projects and post-hurricane rebuilding activity provided a positive construction sector stimulus. In price developments, domestic inflation remained relatively subdued over the review period, reflective of the decline in international oil prices.
Provisional data showed that the Government's overall deficit narrowed during the first quarter of FY2019/20, as the VAT-led increase in aggregate revenue outstripped the rise in total expenditure. Budgetary financing was mainly obtained from internal sources and included a combination of long and short-term debt.
In monetary developments, the expansion in the deposit base outpaced credit growth during the review quarter. Consequently, both bank liquidity and external reserves grew, bolstered by initial re-insurance receipts and foreign currency inflows from real sector activities. Meanwhile, banks' credit quality indicators deteriorated during the third quarter, corresponding with hurricane-related events. Nonetheless, the latest data, for the second quarter of 2019, indicated an improvement in banks' overall profitability, largely on account of a reduction in provisions for bad debts.
In the external sector, the estimated current account deficit narrowed sharply over the review period. This outturn was attributed mainly to re-insurance proceeds following the hurricane, to facilitate private sector rebuilding activities, combined with a decline in net imports. Besides, the estimated surplus on the capital and financial account expanded sharply, partly due to hurricane-related Government borrowings.
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