Monthly Economic and Financial Developments, April 2005
Published: Monday May 30th, 2005
Domestic economic activity continued to strengthen during the first four months of 2005. Growth in tourism and foreign investment activity corresponded to a pickup in estimated foreign inflows through the Banking system and, supported accelerated Bahamian dollar credit expansion, and firming in construction activity. The increased domestic spending and consequently elevated demand for foreign exchange slowed the build-up in external reserves and bank liquidity. Tourism data continue to portray New Providence in a healthier position than Grand Bahama and Family Island arrivals, although indication are that only Grand Bahama is still experiencing significant output constraints, owing to hotel facilities which remain close following the 2004 hurricanes season.
The conclusion of the sale of properties connected with the Cable Beach redevelopment project, and other significant developments already underway in New Providence and the Family Islands, underscore the intensified support expected to be provided to the domestic economy from foreign investments over the medium term. This stimulus is expected to increase over the remainder of 2005 and, with steady mortgage lending, should continue to support brisk construction activity. While the Government also benefited from sizeable one-time receipts from the sale of assets in connection with the redevelopment and settlement of outstanding taxes against some of the private properties sold, it is expected that the added demand stimulus from these activities will further boost revenue growth potential. Meanwhile, healthy external sector projections favour continued upbeat expectations for tourism.
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