Bahamian Growth To Decelerate Through 2024 As Base Effects Fade

  • The Bahamian economy will grow at a weaker pace than the Caribbean average of 3.1% over Fitch Solution’s 10-year forecast period.
  • Bahamas' real GDP will grow by 4.4% in 2023, from an estimated 14.4% growth in 2022, driven by growing output in all GDP components. In particular, private consumption will grow by 4.0% in 2023, from an estimated 7.7% expansion in 2022. Investment will grow by 3.0%, and government consumption will grow by 0.5%, compared with an estimated 9.7% contraction and an estimated 19.0% expansion in 2022, respectively. Net exports will add 1.4 percentage points (pp) to real GDP in 2023 after adding an estimated 10.8 pp in 2022.
  • Additionally, economic activity in 2024 will be driven by growing private consumption, net exports, and investment, prompting the Bahamas' real GDP to grow by 1.8% in 2024 from a 4.4% expansion in 2023. Private consumption will increase by 2.0% in 2024, on par with its 2.9% average growth since 2013. Investment will grow by 1.5% in 2024, from a 3.0% growth in 2023. Government consumption will decline by 1.0% in 2024, from 0.5% growth in 2023. Net exports will add 0.4pp to real GDP in 2024, after adding 1.4pp in 2023.
  • Through to 2032, private consumption will drive average real GDP growth of 2.5%. Fitch expects private consumption, which accounted for 68.2% of GDP in 2022, to average 2.1% growth from 2023 to 2032. Net exports, investment, and government consumption increases over the same period will support overall economic activity.
  • On the fiscal side, the market's fiscal accounts have remained in deficit in recent years, and Fitch estimates that the fiscal deficit will come in at 0.8% of GDP in FY2023 (July 2022-June 2023) from an estimated deficit of 5.8% of GDP in FY2022. Revenues contracted by an estimated 7.8% in FY23 after a 36.7% increase in FY22. Expenditure fell by an estimated 24.5% in FY23 after a 2.6% increase in FY22. Consequently, Fitch expects that the debt-to-GDP ratio will decrease to an estimated 85.0% of GDP in FY23 from 87.2% of GDP in FY22.

(Source: Fitch Solutions)