|The Bahamas Investor Magazine
July 1, 2006
July 1, 2006
The Bahamian economy has reached “the take-off point into what could be the longest, highest and most sustainable economic expansion” in the country’s history, says Bahamian Prime Minister Perry Christie – a claim that has been validated by such well-respected sources as the International Monetary Fund (IMF), Standard & Poor’s and Moody’s Investors Service.
As the Prime Minister pointed out in his recent 2006/2007 Budget Communication, the IMF projects steady growth for the already flourishing Bahamian economy, forecasting 4.7 per cent growth for the fiscal year 2005/06, 6.5 per cent for 2006/07 and 6.7 per cent for 2007/08. Impressively, economic growth for the calendar year 2006 could reach 5.8 per cent, compared to only 0.8 per cent in 2001.
Earlier this year, Standard & Poor’s Ratings Services reaffirmed The Bahamas’ A-1/Stable/A-2 investment rating – a rating shared by only one other CARICOM nation. And Moody’s Investors Service has also granted The Bahamas the highest rating among the independent nations of the hemisphere, save Canada and the US. “These overlapping predictions strongly suggest that the growth rate of the Bahamian economy started to accelerate in the latter part of 2005 and will continue to accelerate through the whole of 2006,” Christie said in the Budget Communication.
Domestically, indications of a strong economy abound. The Bahamian dollar continues to be robust and Central Bank reserves now stand at $600 million, having nearly doubled since 2001, when they were only $312 million. The increased reserves enabled the Central Bank to relax exchange controls earlier this year. Meanwhile, The Bahamas’ external debt stands at less than $500 million, meaning the country’s economy is not heavily exposed to international commercial banks and other lenders.
In his Budget Communication, Prime Minister Christie noted that The Bahamas owes much of its accelerated economic development to its success in attracting major tourism projects to virtually every major island. Inward investment is projected to be $8 billion for the next few years – an impressive sum relative to the size of the overall economy and in light of the fact that The Bahamas’ total GDP is only $5.9 billion. The inflow of capital is expected to continue over the next several years, as construction of the Baha?Mar project commences and the so-called “anchor tourism projects” on the Family Islands proceed.
Grand Bahama gets grander
One of the most highly anticipated projects, Ginn Development Company’s mega-resort planned for Grand Bahama’s West End, is expected to be similar in size and scope to Sol Kerzner’s Atlantis resort on Paradise Island, according to Prime Minister Christie. Significantly, in June, Ginn upped the estimated investment value in their planned development from $3.2 billion to $4.9 billion, reaffirming their commitment to creating a world-class resort to rival some of the most opulent destinations in the world. In its June budget, the government also pledged $8 million to enhance and repair Grand Bahama’s infrastructure. Soon after followed the news that the Royal Oasis Resort in Freeport, closed since September 2004, had a new owner, which all bodes well for Grand Bahama’s fiscal future.
Traditionally an economic powerhouse, the tourism sector continues to boom, enjoying a record-breaking year in 2005. Tourist arrivals and visitor spending both hit all-time highs, as more than 5 million travellers entered the islands by plane or boat, spending $2.05 billion. And Prime Minister Christie says the numbers for 2006 should be even stronger.