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Monthly Economic and Financial Developments, April 2010

Published: Monday June 7th, 2010

Against the backdrop of signs of a slowdown in the pace of the global recovery, domestic economic activity continued to stabilize over the review month. Partial tourism performance data suggest an improvement in output; however, persistent softness in private sector demand constrained economic activity and negatively affected Government’s revenues, to cause a further deterioration in the overall deficit over the nine months of FY2009/10. With credit conditions remaining weak, monetary developments featured sustained growth in both bank liquidity and external reserves.

Initial estimates for the hotel sector point to ongoing recovery in tourism activity, which however, remained below pre-crisis levels. Visitor arrivals firmed by 9.2% over the first quarter to 1,382,886, a turnaround from a 2.9% contraction in 2009. The outcome was occasioned by a 10.6% boost in the dominant sea traffic segment, along with the 5.4% rebound in air visitors. Disaggregated by port of entry, visitors to New Providence, which accounted for 58.8% of total arrivals, advanced by 16.7%, and was supported entirely by the 23.0% gain in sea traffic. Sea visitors also led the 14.9% hike in arrivals to Grand Bahama, but were also responsible for the 4.8% decline in Family Island visitors.

Consumer price inflation maintained a moderating trend, with a 3.7 percentage point deterioration in average price increases to 1.2% over the twelve months to March, in contrast to a 2.6 percentage point firming to 5.0% in the same period of 2009. This outturn reflected price declines for recreation, entertainment & services and housing—the most heavily weighted category in the Index—by 1.2% and 0.5%, respectively. In addition, average price increases softened significantly, by over 3.0 percentage points, for “other” goods & services, food & beverages and furniture & household operation, to 1.6%, 2.6% and 2.2%, respectively.

Government’s overall fiscal deficit for the nine months of FY2009/10 deteriorated by $29.4 million (13.1%) to $253.9 million, relative to the same period a year earlier, as firming in expenditures offset revenue gains. Outlays grew by $49.2 million (4.3%) to $1,204.7 million—inclusive of a $25.7 million (29.2%) expansion in capital spending related to infrastructure developments, and a $31.2 million (72.3%) advance in net lending to public corporations to $74.5 million. However, current spending fell marginally by 0.8% to $1,016.7 million, as gains in Government transfers of 2.8%—related to higher interest payments on debt—were negated by a 3.0% decline in consumption expenditures. Growth in total receipts, of $19.8 million (2.1%) to $950.9 million, was due solely to an almost two-fold improvement in non-tax revenues to $163.4 million. In contrast, tax receipts declined by 6.7% to $787.4 million, as gains in business & professional fees of 22.0%, were outweighed by lower collections from international trade activities (6.7%) and travel-related services (25.9%).

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