Quarterly Economic Review, June 2018

Published: Tuesday September 25th, 2018

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2018. The Review provides an examination of the domestic economy’s performance, as well as sectoral developments, principally during the April to June period.

Indications are that the domestic economy maintained it modest growth trajectory during the second quarter of 2018, supported by ongoing improvements in the tourism sector. In addition, foreign investment-related activity continued to provide stimulus to the construction sector. In this environment, labour market conditions improved, as the number of employed person grew, buoyed by tourism-related job gains. Further, domestic inflationary pressures remained contained, although the recent rise in international oil prices resulted in firming in domestic energy costs.

The fiscal performance for the eleven months of FY2017/18, indicated a narrowing in the overall deficit, attributed to a capital spending-led reduction in aggregate expenditure, alongside a rise in total revenue. Budgetary financing was obtained largely from external sources, including a US$750.0 million external bond issue in November, 2017. 

In monetary developments, as the expansion in domestic credit outstripped the increase in deposits, the growth in bank liquidity slowed during the second quarter. Meanwhile, external reserves contracted, reflecting a rise in demand for foreign currency to facilitate primarily fuel payments. Banks’ credit quality indicators improved during the review period, due to the modest strengthening in economic activity, along with ongoing debt restructuring measures and loan write-offs. The sector’s overall profitability levels for the first quarter also improved, reflecting reductions in interest expenses and operating costs. Further, the sector’s capital adequacy ratio continued to exceed regulatory requirements. 

In external trade developments, the estimated current account deficit widened sharply during the second quarter, explained by an expansion in net investment outflows and a significant decline in the services account surplus. In contrast, the estimated surplus on the capital and financial account increased considerably, attributed to a rise in net direct and other “miscellaneous” investment inflows. 

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