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Monthly Economic and Financial Developments (MEFD) February 2020

Published: Monday March 30th, 2020

Domestic Economic Developments

Overview

Preliminary indications are that the domestic economy exhibited moderated, but slightly positive performance during February, in line with tourism output constraints. Sustained growth in the sea segment contrasted with a reaction in the high value-added air component which contracted, as some capacity remained offline in hurricane-damaged areas. The effects of travel restrictions related to COVID-19 began to take an accelerated toll in March. Nevertheless, ongoing foreign investment projects provided a stimulus to the construction sector, and to a lesser extent post-hurricane rebuilding works. Monetary sector developments featured an expansion in bank liquidity, amid a build-up in total deposits and a reduction in domestic credit. Similarly, during the review month, external reserves registered growth, on account of foreign currency inflows from re-insurance and real sector activities.

Real Sector

Tourism

Tourism metrics for the month of January revealed that the sector performed under potential, as the rise in sea arrivals overshadowed the fall off in the high value-added air segment.

Preliminary data provided by the Ministry of Tourism (MOT), revealed that total visitor arrivals for the month of January grew by 7.9%, albeit a sharp moderation from the 19.3% growth recorded in the same period last year. Specifically, the sea segment rose by 10.8%, following a 17.1% expansion a year earlier. Further, the high value-added air segment decreased by 3.5%, vis-a-vis a 28.8% increase last year.

Disaggregated by major ports of entry, arrivals to the Family Islands surged by 63.8%, exceeding the 23.1% growth in the previous year, as the 76.0% rise in sea passengers, outstripped the 23.2% decrease in air traffic. Conversely, visitors to New Providence reduced by 14.2%, contrasting with the 30.0% increase in 2019, with the 20.3% falloff in the sea segment, overshadowing the 3.5% gain in the air component. In addition, underpinned by reductions in both the sea (17.9%) and air (51.4%) passengers, total arrivals in Grand Bahama contracted by 21.9%, although lower than the 33.4% decline during the same period in the previous year.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) showed that total departures--less domestic traffic--through the country's gateway airport grew by 7.5% year-over-year in February, but was significantly lower than the 26.4% expansion during the same period in 2019. Underlying this development, the dominant U.S. component rose by 7.5%, a marked slowdown from the previous year's 30.0% gain. Similarly, the increase in non-U.S. departures moderated to 7.6%, from 10.6% in the same month last year. During the first two months of 2020, aggregate departures moved higher by 6.8% but were notably less than the 24.1% growth in the prior year. By region, U.S. departures grew by 6.7%, a moderation from a 27.1% rise a year earlier. Likewise, the non-U.S. international component increased by 7.0%, a slowdown from a 10.9% gain in the previous year.

Data provided by AirDNA on the vacation rental market revealed that for the month of February, total room nights sold edged up by 0.7%, bolstered by gains in bookings for entire place listings and hotel comparable of 0.6% and 1.2%, respectively. In contrast, the average daily room rate (ADR) for both entire place listings and hotel comparable decreased by 1.8% and 1.7% to $365.11 and $150.45, respectively.

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