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Monthly Economic and Financial Developments, November 2018

Published: Friday December 21st, 2018

Overview

Preliminary economic indicators suggest that the modest growth in the Bahamian economy persisted during November, supported by gains in tourism sector output, while foreign investment projects continued to provide the impetus for construction sector activity. In the monetary sector, liquidity narrowed, as the growth in domestic credit overshadowed gains in deposits, while external reserves contracted, reflecting the traditional increase in foreign currency demand during the latter half of the year.

Tourism

The latest tourism indicators show that the sector sustained its upward trajectory, underpinned by improved economic fundamentals in the main source markets, along with a significant increase in high-end room capacity in the capital.

Specifically, the latest official data from the Ministry of Tourism for the month of September-revealed that total visitor arrivals improved by 62.4%, relative to a 34.9% reduction in the prior year, when the passage of Hurricane Irma through the region significantly disrupted travel itineraries. Similar-although more muted-trends were noted over the nine-month period, as the total number of visitors rose by 8.5%, areversal from a 5.3% decline a year earlier. This outcome was underpinned by growth of 16.5% and 6.1% in the air and sea components, respectively, vis-a-vis contractions of 8.4% and 4.3%, during the same period in 2017.

An analysis by major port of entry revealed a strong increase in traffic to the Family Islands, as total arrivals advanced by 25.4%, a reversal from a 5.8% decline in 2017. In particular, the number of air visitors rose by 12.0%, outstripping the 10.8% uptick a year earlier, while the sea component strengthened by 28.2%, to eclipse the 8.6% falloff in the previous year. Further, total arrivals to Grand Bahama firmed by 8.9%, vis-a-vis 2017's 32.0% contraction, as the sea and air components increased by 9.6% and 3.3%, respectively, after declines of 28.6% and 50.7%, during the same period last year. In addition, arrivals to New Providence, edged-up by 0.1%, lower than the 2.4% gain a year earlier, as the dominant sea component decreased by 7.1%, compared to a 6.7% uptick a year ago; however, air traffic expanded by 18.8%, relative to a 7.3% falloff in 2017.

Provisional data from the Bahamas Hotel and Tourism Association and the Ministry of Tourism, indicated that the trends noted over the nine-month period were sustained in the following month. A survey of large hotels showed a 34.0% gain in room revenue during October. This outturn reflected a $5.43 (3.1%) advance in the average daily room (ADR) rate to $179.48 and a 30.0% increase in the number of room nights sold, while the average occupancy rate steadied at 45.1%. Similarly, on a year-to-date basis, total room revenue expanded by 31.0%, underpinned by a 27.0% uptick in room nights sold, combined with a $60.36 (34.7%) increase in the ADR to $234.41, which overshadowed a slight 40 basis point fall in the average occupancy rate to 61.5%.

Indications are that November was another positive month for the tourism sector. Specifically, the number of passenger departures from the country's largest airport-as reported by the Nassau Airport Development Company Ltd. (NAD)-firmed by 15.7%, outpacing the 4.9% advance recorded a year earlier. In particular, the gains in both non-US international and US traffic quickened, by 11.6 and 10.6 percentage points to 16.8% and 15.5%, respectively. Likewise, over the eleven-month period, total departures strengthened by 14.0%, vis-a-vis a 1.3% reduction in the prior year. In the underlying movements, non-US international passengers rose by 18.6%, a reversal from the year earlier decline of 3.4%, while US passengers increased by 13.2%, contrasting with the 1.0% softening in 2017.

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