The Bahamas Set For Reasonable Economic Growth In 2023

• Fitch Solutions forecasts a 4.0% real GDP growth for the Bahamas in 2023, down from the estimated growth of 8.1% in 2022.
• Economic growth in 2022 was mainly driven by the tourism sector’s recovery from the main impacts of the COVID-19 pandemic. Total tourist arrivals were up by 278.5% y-o-y for January-November 2022, as pandemic-era restrictions were eased. This translated into stronger service exports, as well as private consumption, as labour market conditions improved. 
• However, growth will slow from 2022 levels due to strong base effects and slowing global growth, as well as elevated inflation, which will weigh on real household disposable incomes.
• Notably, high energy prices will prevent a larger contribution to growth from private consumption. That said, private consumption is expected to add 3.2% to headline growth in 2023 according to Fitch’s forecasts, significantly down from an estimated 9.0% contribution in 2022.
• Additionally, given that the housing and fuels component of the Bahamas’ consumer price basket comprises over 45% of the total, this will continue exposing the Bahamas to elevated global energy prices resulting from the ongoing impacts of the war in Ukraine.
• Consequently, growth is forecasted to slow further to just 2.6% in 2024, with real GDP set to return to pre-pandemic levels and economic activity to settle on a slower long-term trajectory.

(Source: Fitch Solutions)