Bahamas’ Growth ‘More Than Double’ Projections

• The International Monetary Fund (IMF) revealed that the Bahamas exceeded its economic growth projections for 2021. The country had achieved more than double the projected gross domestic product (GDP) growth with actual economic output expanding by 5.5% relative to the forecasted 2%. 
• However, the faster-than-anticipated reflation of the Bahamian economy following the COVID-19 pandemic, coupled with the impact from soaring global inflation and uncertainties caused by Russia’s invasion of Ukraine, has resulted in the IMF reducing 2022’s growth forecast by two percentage points from 8 per cent to 6 per cent. However, GDP growth estimates for 2023 have been maintained at 4.1%. 
• The Bahamas’ tourism-dependent economy was hit hard by the COVID-19 pandemic, which came on the heels of the devastation caused by Hurricane Dorian. While the economy is recovering strongly, the pandemic has exacted a tragic human and social toll and caused a significant weakening in public finances. 
• Coupled with an increase in construction activity, the output is estimated to have expanded by around 5.5% last year. Real GDP growth is estimated at around 6% this year, although a full recovery to pre-pandemic levels is not expected before the end of 2023. Furthermore, inflationary pressures are building in line with global developments and are expected to ease only gradually.  
• Risks to the outlook are however significant. A re-intensification of the pandemic cannot be discarded. With about 40 per cent of the population fully vaccinated, the emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions. Alternatively, rising cases in source countries could dissuade travel and lead to a renewed decline in tourism. Higher food and oil prices, because of the effects of the war in Ukraine, could erode consumer demand and impose a particularly heavy burden on the vulnerable.

 (Sources: IMF and The Tribune)