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Central Bank releases monthly economic report – PDF

Early indications are that domestic economic conditions were relatively subdued in October, although foreign investment-led construction activity continued to secure a modest growth outcome, according to The Central Bank of The Bahamas' Monthly Economic and Developments report for October 2013. 

Source:
Date:
Updated:
Central Bank of The Bahamas
Friday, December 13, 2013
Friday, December 13, 2013

Early indications are that domestic economic conditions were relatively subdued in October, amid a lacklustre tourism performance, although foreign investment-led construction activity continued to secure a modest growth outcome. Price developments were relatively benign, as average domestic energy costs decreased over the review month. On the fiscal side, the overall deficit narrowed during the first quarter of FY2013/14, owing to a combination of higher revenue collections and reduced expenditure. In the monetary sector, both bank liquidity and external reserves expanded, primarily reflecting Government’s external borrowing activities.


Sustained weakness in key source markets, alongside increased competition from other regional destinations, constrained growth in tourist arrivals for the nine months to September, to 2.3% from 8.3% in 2012, for a 4.5 million visitor count. In particular, the high value-added air segment contracted by 6.5%, a reversal from last year’s 9.4% gain, while the expansion in sea passengers tapered to 5.1% from 8.0%. By port of entry, visitors to New Providence rose by 7.8% to 2.6 million, with the 15.5% hike in the dominant sea component outpacing the 6.9% falloff in air traffic. In contrast, the Grand Bahama market experienced a decline of 2.8%, owing to contractions in both the air and sea segments, by 17.1% and 0.7%, respectively. Despite the opening of a mid-sized resort in the middle of the year, arrivals to the Family Islands decreased by 4.7%, as a 5.5% falloff in sea visitors outstripped the 1.4% improvement in the air component.

Hotel performance indicators confirm the weakness in the tourism sector, although the hosting of a major sporting event appeared to buoy occupancy levels in one (1) major hotel. According to preliminary information from a sample of major hotels in New Providence and Paradise Island, total room revenue contracted by 15.0% in October year-on-year, with the 9.4 percentage point falloff in the average hotel occupancy rate to 44.0%, outweighing the 2.5% rise in the average daily room rate (ADR) to $161.05. Similarly, over the ten-month period, properties surveyed reported an 8.0% drop in revenue, as the 2.8% increase in the average daily room rate to $234.11 did not compensate for the 5.8 percentage point reduction in room occupancy to 64.3%.

Domestic consumer price inflation—as measured by changes in the Retail Price Index for All Bahamas—moderated by 2.4 percentage points to a mere 0.4% over the 12 months to October—significantly influenced by a deceleration in average transportation cost gains to 0.2% from 4.1% in the comparative year-earlier period. Average cost increases also slackened for housing, water, gas, electricity & other fuels—the most heavily weighted item on the index—to 0.1% from 3.7%; furnishing, household equipment and routine household maintenance, to 0.8% from 3.7%; food & non-alcoholic beverages, to 0.8% from 3.4%; education, to 1.6% from 2.9%; medical care & health, to 1.1% from 2.1%; clothing & footwear, to 0.8% from 1.1% and miscellaneous goods & services, to 0.5% from 0.7%. In addition, the decrease in the average price for communication was extended to 3.5% from 1.2% in 2012, while recreation & culture costs fell by 0.7%, vis-à-vis a slight 0.1% increase in the corresponding period last year. In a modest offset, average inflation rates firmed for restaurant & hotels and alcohol, tobacco, & narcotics, to 3.2% and 2.7% from 2.2% and 1.6%, respectively.

Energy price developments were mixed over the review period, as average gasoline costs declined by 3.1% in October over the previous month, and by 9.2% year-on-year to $5.26 per gallon. In contrast, average diesel prices rose by 2.8% during the month, but fell by an equivalent percentage over the year, to $5.21 per gallon. With regard to electricity, the Bahamas Electricity Corporation’s fuel charge fell by 10.3% and 19.3%, on a monthly and annual basis, respectively, to 22.00¢ per kilowatt hour (kWh).

Provisional data on the Government’s budgetary operations for the first quarter of FY2013/14 showed that the overall deficit narrowed by $66.2 million (45.9%) to $78.1 million, reflecting a gain in total revenue of $8.5 million (2.9%) to $305.3 million and a decline in aggregate expenditure of $57.8 million (13.1%) to $383.3 million. In terms of revenue, non-tax receipts grew by $9.4 million (39.1%) to $33.5 million, primarily explained by a $9.5 million (46.7%) rise in fines, forfeits & administrative fees. In contrast, tax collections contracted marginally by $0.9 million (0.3%) to $271.7 million, led by a $15.2 million (9.9%) decline in taxes on international trade, which offset the almost two-fold increase in other “non-allocated” taxes to $28.4 million. On the spending side, current expenditures decreased by $27.5 million (7.5%) to $342.1 million, reflecting in part a decrease in subsidies to a local public health authority. Capital spending contracted by $32.1 million (51.5%) to $30.2 million, occasioned by a $21.8 million (45.2%) falloff in capital formation, in line with the reduced level of infrastructural projects. However, Government’s budgetary support to public entities grew by a net of $1.9 million (20.2%) to $11.1 million.

For full text reading, please download the attached document.

Source: The Central Bank of The Bahamas.

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