Monthly Economic and Financial Developements, July 2006

Published: Thursday September 7th, 2006

Initial data for the month of July indicated continued growth in economic activity, highlighted by sustained strengthening in consumer demand, tourism investment and construction activity. However, information for the first six months of the year revealed weakness in the cruise sector, which resulted in a contraction in overall arrivals.

Total visitor arrivals for the first half of the year declined by 1.8% when compared to the same period in 2005, as the 4.0% rise in air arrivals was overshadowed by a 4.4% downturn in sea visitors. Arrivals to New Providence contracted by 3.2% to 1,509,140 and to the Family Islands, by 4.4% to 711,377. Conversely, the visitor count to Grand Bahama rose significantly by 10.5%, due solely to improvements in the cruise sector, as air arrivals were virtually unchanged.

Consumer prices for the twelve-month period ending June 2006 rose by 1.9%, up from 1.5% in the previous year. The most noteworthy increases were observed for food and beverages (4.1%), other goods and services (3.8%), housing (2.7%), and furniture and household operations (2.1%). Medical & health care and education recorded minor gains of 1.4% and 1.2% respectively, while contractions were noted in average costs for recreation & entertainment services and transport & communications. In addition, second quarter average prices at the pump for diesel and gasoline accelerated by $0.50 and $0.78, to $3.39 and $4.36, respectively.

The fiscal performance reflected the ongoing economic expansion as sustained advances in revenue receipts outstripped the growth in expenditures to occasion an improvement in the deficit, by 45.5% to $78.4 million during the first 11 months of FY2005/06. Government revenue receipts firmed by $177.2 million (19.5%) to approximately $1,087.6 million, while expenditure rose by $111.6 million (10.6%) to an estimated $1,165.0 million. Tax revenue expanded by approximately 17.5%, reflecting higher import demand, while accretions to non-tax revenue firmed by 60%, owing mainly to increased receipts from both other "miscellaneous" income as well as fines, forfeits and administrative fees. Higher outlays for wages and salaries, as well as goods and services, supported a 9.2% hike in current expenditures. In addition, capital expenditure almost doubled to $100.6 million, as a result of intensified infrastructural works.