Quarterly Economic Review September 2024
Published: Saturday November 30th, 2024
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Third Quarter of 2024. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period April to June.
Preliminary indications are that the domestic economy sustained its growth momentum during the third quarter of 2024, albeit at a slower pace in comparison to 2023, as economic indicators continued to converge closer to their expected medium-term potential. Tourism output record healthy gains, but was more tempered, even though demand for travel in key source markets persisted. In particular, amid capacity constraints, performance in the high value-added air segment performance tapered off, while sea traffic remained buoyant. In addition, several small to medium-scale foreign direct investment-related projects, provided ongoing support to the construction sector. Labour market conditions showed improvement over the second quarter of 2024, reflective of the ongoing strengthening in economic activity. In price developments, inflationary pressures eased during the twelve-months to August, underpinned by tempered costs increases on imported goods and services, owing to a decline global oil prices.
Provisional estimates revealed that during the fourth quarter of FY2023/2024, the Government’s fiscal position reversed to a surplus, from a deficit in the comparative quarter of FY2022/23. Contributing to this outcome was a reduction in aggregate expenditure, combined with a value added tax (VAT)-led growth in total revenue. Financing for debt rollovers and financial assets acquisition during the fourth quarter of FY2023/24 was obtained largely from domestic sources, consisting of a mix of long and short-term debt.
During the third quarter, monetary developments were marked by a contraction in bank liquidity, as the expansion in domestic credit outweighed the rise in the deposit base. Similarly, accumulation in the banking system’s net foreign assets moderated when compared to the same quarter last year, attributed to the seasonal fluctuations in net foreign currency inflows from real sector activity. Meanwhile, undergirded by the sustained improvement in the domestic economy and ongoing loan write-offs, banks’ credit quality indicators improved over the review quarter. In addition, the latest available data for the second quarter showed an increase in banks’ overall net income, on account of a rise in other non-interest income and a decrease in bad debt expenses.
In the external sector, the estimated current account deficit widened during the third quarter, explained by an increase in the merchandise trade deficit, along with a reduction in the services account surplus, reflecting the tapering in tourism output. In contrast, the financial account inflows expanded, largely attributed to a switch in portfolio investment transactions, to a net inflow, from a net outflow in the previous year. Meanwhile, similar to the comparative 2023 period, the capital account transfers registered nil transactions during the third quarter.
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