Real GDP Set to Slow in The Bahamas

• Real GDP growth in the Bahamas is expected to slow from an estimated 1.9% in 2024 to 1.7% in 2025 according to Fitch Solutions, with tourism sector and private consumption expected to be the primary drivers of the expansion. However, high government debt load necessitating fiscal consolidation, as well as solid consumer spending boosting import growth will prevent a faster pace of growth.
• Further, economic growth will hold steady at 1.7% in 2026, as capacity constraints in the tourism sector prevent the sector from more meaningfully driving faster headline real GDP growth.
• The robust tourism sector and steady improvements in living conditions will reduce the risk of social unrest in the Bahamas in 2025, as well as support the position of the incumbent Progressive Liberal Party.
• Aided by its large majority in parliament, the Progressive Liberal Party will be in a strong position to pass bills, implying limited governance risks as well as a good chance of winning the next election, due by September 2026.
• Nevertheless, significant risks remain. Most notably, the government will make limited progress in stamping out corruption and reducing very high levels of violent crime, implying security risks will remain highly elevated in the months ahead.
• Furthermore, the Bahamas remains sensitive to global geopolitical events, both given its reliance on external demand and its sensitivity to any unexpected rise in global commodity prices. An unexpected geopolitical shock could have the ability to push up inflation once again in the Bahamas, denting its economic performance.

(Source: Fitch Connect)