Monthly Economic and Finanancial Developments, May 2007

Published: Friday July 13th, 2007

Preliminary evidence suggests steadied economic growth during the month of May, buoyed by ongoing construction activity on tourism-related investments, relative to moderated tourism inflows and subdued firming in domestic demand. In this environment, net foreign currency inflows strengthened, supporting improvements in both bank liquidity and external reserves.

The most recent data on the tourism sector, for the month of March 2007, indicated that, compared to the same month last year, visitor arrivals fell marginally by 0.7% to 0.5 million, reflecting a contraction in air arrivals of 2.1% and a relatively unchanged number of sea visitors. In terms of the major markets, total arrivals to New Providence rose by 2.1%, as a 4.6% decrease in air visitors was overshadowed by a 7.1% rise in sea tourists. Conversely, declines in both air (1.7%) and sea (13.4%) arrivals caused a 9.8% reduction in visitors to Grand Bahama, and arrivals to the Family Islands fell by 1.4%, owing to the 3.7% softening in sea traffic that outpaced an 8.6% improvement in air visitors.

With regard to prices, the rate of inflation during the twelve-months ending May 2007 firmed to 2.4% from 1.7% in the previous year. Registering notable costs increases were food & beverages (4.16%), recreation entertainment & services (3.18%), medical care & health (2.58%) and furniture & household operations (2.26%). However, average inflation for housing and education softened to 1.13% and 0.57% respectively.

Over the first eleven months of FY2006/07, the deficit on Government's budgetary operations increased slightly to a preliminary $91.4 million from $88.8 million in the previous fiscal year. While the outcome was supported by a 12.2% strengthening in total revenue to $1,210.4 million, more intensified capital spending of 31.2% boosted total expenditure by 11.2% to $1,248.8 million. Revenue gains included a 6.5% rise in collections of trade taxes as well as robust strengthening in "other" unclassified receipts from both tax and non-tax sources. Meanwhile, recurrent outlays rose at a steady pace of 9.3% to $1,116.9 million, to comprise 89.4% of total spending.

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