Bahamian Economy Rebounds With 8% Growth

• The International Monetary Fund says the country’s recovery is “strong” with real GDP growth pegged at 8% this year.
• The fund, in its Article IV Consultation Report for The Bahamas, said: “The Bahamas is experiencing a tourism-led rebound. The economy expanded by almost 14% in 2021, as net tourism receipts tripled relative to 2020. The strong recovery is expected to continue in 2022, with real GDP growth projected at 8%. The war in Ukraine, which adds considerable uncertainty to the outlook, is expected to affect The Bahamas primarily through higher commodity prices.” 
• The fund also said that, despite the phenomenal growth, it would take until 2024 before the country would be able to return to the pre-pandemic levels of GDP of 2019. “The economy contracted by almost 24% in 2020, as tourism receipts fell by more than 75%. Starting in the second half of 2021, air arrivals saw a steep rebound, recovering to half of 2019 levels 2021, while cruise arrivals, which were initially more subdued, have recently picked up.” 
• Coupled with a rebound in construction activity, output expanded by around 14% in 2021. Labour market conditions are improving, but remain challenging, with unemployment estimated at around 18% at the end of 2021 compared to over 25% in 2020. 
• However, risks are skewed downwards given a difficult near-term financing situation, rising inflationary — and potentially BOP (balance of payments) — pressures because of the war in Ukraine, an ongoing threat from the evolving pandemic, and the country’s high vulnerability to natural disasters. Additionally, the pandemic will likely exacerbate The Bahamas’ long-standing record of low growth. Staff projects medium-term potential growth at just 1.5%, owing to the slow structural reform implementation, including in the energy sector.

(Source: The Tribune)