Central Bank of The Bahamas Forecasts ‘Subdued’ Economic Growth for 2024 and 2025

• The Central Bank of The Bahamas projects that the economy will continue to grow, though at a more “subdued” pace this year and in 2025.
• The economy expanded over the first three quarters of 2024; however, indicators show that growth has slowed compared to 2023. Central Bank Governor John Rolle noted that these trends align with the expected leveling off of gains following the economy’s recovery from the pandemic.
• The indicators reflect slower growth in tourism earnings due to constrained capacity in the stopover segment and moderation in the otherwise healthy cruise trends. Therefore, while visitor arrivals rose by 16.3% over the first nine months of the year, it is less than half the growth rate seen in 2023. This rise was primarily driven by a 19.8% boost in sea arrivals. Air arrivals, which reflect high-yield stopover visitors, grew by less than 1.0% over the first three quarters, compared to a 20.9% expansion in the same period last year.
• With recovery to pre-pandemic volumes, the sector now faces constrained hotel room capacity, which has only marginally increased accommodation prices in 2024, according to Governor Rolle. Although the vacation rental market expanded as a buffer, this segment experienced slight declines in both average prices and occupancy compared to 2023. If this trend continues, it could dampen new investments in vacation rentals.
• That aside, foreign investments should support sustained construction activity, and that, along with tourism, should drive employment growth.
• Governor Rolle also highlighted that “the economy continued to benefit from lower inflation in imported goods and services”. Notably as at early November, external reserves were estimated at $2.68Bn, compared to approximately $2.51Bn at the same point last year. The Central Bank forecasts a possible decrease in external reserves for 2024 due to increased private sector spending on imports.
• This continues to be in line with the Central Bank’s posture to encourage accelerated lending to the private sector. Moreover, there has also been increased capital raising efforts in the private sector that are also stimulating investment-related imports. Even still, the coverage provided by the external reserves is expected to remain more than adequate to support the fixed exchange rate. 

(Sources: Eyewitness News & Central Bank Bahamas)