Quarterly Economic Review March 2023

Published: Wednesday June 14th, 2023

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the First Quarter of 2023. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period January to March.

Preliminary indications are that during the first quarter of 2023, the Bahamian economy maintained its positive growth momentum, although more moderated, as the recovery from the adverse effects of the Novel Coronavirus (COVID-19) pandemic neared completion. Tourism output remained buoyant, undergirded by gains in both the high value added air component and sea passengers, as the demand for travel in key source markets was sustained. In addition, several new and ongoing foreign investment-related projects, as well as ongoing post-hurricane reconstruction works, supported activity in the construction sector. In price developments, domestic inflation increased, attributed to the pass-through effects of higher prices on imported oil and other goods.

Provisional data for the third quarter of FY2022/23, revealed that the Government’s position reversed to a surplus from a deficit in the comparative quarter of FY2021/22. Contributing to this outcome, was a VAT-led growth in total revenue, which overshadowed the rise in aggregate expenditure. Budgetary financing was secured largely from domestic sources, and consisted of a combination of long and short-term debt instruments.

In monetary developments, bank liquidity declined marginally, notwithstanding narrowed growth in the deposit base, which contrasted with slowed contraction in domestic credit. Similarly, there was a notable slowdown in the buildup in external reserves, vis-à-vis a year earlier, which had included the receipt of proceeds from Government’s external borrowings. Meanwhile, underpinned by improving economic conditions and ongoing loan write-offs, banks’ credit quality indicators improved during the review quarter. Further, the latest available data for the fourth quarter of 2022 showed that domestic banks overall profitability levels increased, on account of a decline in provisions for bad debt, combined with lower depreciation and operating costs.

In the external sector, the estimated current account deficit narrowed over the review quarter, explained by a significant expansion in the service account surplus, buoyed by robust gains in tourism earnings. Conversely, the financial account inflows decreased by almost half, largely attributed to a marked reduction in other investment receipts and a decline in net private direct investments. Meanwhile, the estimated capital account transfers were nil during the first quarter, similar to the comparative 2022 period.

The report also features a review of financial services activity in 2022 and its contribution to the overall economy. The results of the survey indicated a decline in balance sheet and fiduciary activities in 2022. In addition, employment within the banking sector reduced, due to ongoing consolidation of business operations. However, expenditure increase owing to a rise in operational costs. Meanwhile, credit unions and the domestic insurance industry provided expanded contributions, exhibited by gains in balance sheet assets. Nevertheless, the securities industry recorded a reduction in the number of active entities and vehicles, corresponding with a falloff in the value of international assets under management.

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