Quarterly Economic Review June 2025
Published: Wednesday September 3rd, 2025
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2025. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period April to June.
Indications are that the domestic economy sustained its tempered pace of growth during the second quarter of 2025, as economic indicators continued to normalize, trending towards their expected medium-term potential. Tourism momentum slowed, although staying healthy, as the high value-added stopover segment of the market remained constrained by accommodation capacity. However, the cruise component recorded robust gains. In addition, various small to medium-scale foreign investment projects provided ongoing support to the construction sector. In price developments, inflationary pressures decreased, underpinned by reduced cost pressures from imported fuel and other goods and services.
Preliminary estimates for the first eleven months of FY2024/2025 showed that the Government’s overall deficit narrowed, compared to the corresponding period for FY2023/2024. Underlying this development, the increase in total revenue, outpaced the growth in aggregate expenditure. Budgetary financing was dominated by borrowings from internal sources, and comprised of a combination of long and short-term debt instruments.
Monetary developments were marked by a buildup in bank liquidity during the second quarter, undergirded by an expansion in the deposit base, which contrasted with the decline in domestic credit. Similarly, the financial system’s net foreign assets recorded a notable accumulation, relative to the year earlier, bolstered by proceeds from the Government’s external borrowing, along with foreign currency inflows from real sector activities. Meanwhile, banks’ credit quality indicators registered mixed trends over the second quarter, as the rise in short-term arrears, overshadowed the falloff in non-performing loans, but improved on an annual basis, underpinned by the ongoing, albeit moderated, pace of economic growth. In addition, the latest available data for the first quarter of 2025, revealed that domestic banks’ overall profitability levels increased, largely attributed to a rise in income from commission and foreign exchange fees.
On the external side, the estimated current account deficit widened during the review quarter, explained by an increase in the primary income account deficit, along with a reduction in the services surplus, reflecting the tapering in net travel receipts, and a rise in the merchandise trade deficit. Also noteworthy, the financial account inflows grew, owing primarily to an expansion in direct investment inflows and a notable decrease in “other” investment outflows, attributed to higher external loan exposures.
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