Indications are that the domestic economy maintained a positive, although mild, growth momentum, during the month of December, according to the Central Bank of the Bahamas‘ Monthly Economic and Financial Developments report.

More favourable foreign investment activity, alongside ongoing public sector infrastructure projects, buoyed construction output and the tourism sector benefitted from stronger seasonal hotel earnings.

The central government’s overall deficit contracted over the first five months of FY2011/12, occasioned by an increase in revenues and a marginal decline in expenditures. In the monetary sector, liquidity and external reserves rose modestly, supported by net foreign currency inflows arising partly from foreign investment and government’s financing activities.

Preliminary evidence suggests that tourism sector output continued to strengthen in December. The 28.5 per cent surge in sea passengers, alongside a more moderate 7.7 per cent advance in air arrivals, led to higher growth of 23.8 per cent in overall tourists, relative to 1.7 per cent in 2010.

For 2011, growth in total visitor arrivals slackened to 6.3 per cent from a 13.1 per cent hike in 2010, with the 9.1 per cent expansion in the larger sea segment outweighing the 2.1 per cent reduction in air visitors.

Consistent with the gains in stopovers, hotel performance data from a sample of properties in Nassau and Paradise Island showed room revenues for December advancing by 6.5 per cent over the comparable period a year earlier. Underpinning this outturn was a 3.3 percentage point gain in the occupancy rate to 58.3 per cent, accompanied by a $3.55 increase in the average daily room rate to $270.65.

Data on the central government’s fiscal operations for the first five months of FY2011/12 showed a $38.8 million (20.1 per cent) reduction in the deficit to $154.0 million, relative to the comparable period a year earlier. Total revenue grew by $18.6 million (4.0 per cent) to $485.0 million, the bulk of which was attributed to tax revenue.

Total expenditure contracted by $20.2 million (3.1 per cent) to $693.0 million, as a public corporation’s partial repayment of outstanding debt lowered the government’s net lending to public bodies by $24.8 million, in contrast to a year earlier increase of $19.8 million. Capital spending decreased by $7.2 million (10.6 per cent) to $60.5 million.

Download The Central Bank of the Bahamas’ Monthly Economic and Financial Developments report here.