Monthly Economic and Financial Developments, August 2015

Published: Wednesday September 30th, 2015

Preliminary performance indicators suggest that the economy maintained its mildly positive growth momentum during the review period, supported by the healthy performance of the long-stay segment of the tourist sector, alongside several varied-scale foreign direct investment projects, which braced construction activity. On the prices front, although domestic inflation firmed over the past twelve months, the level remained mild, due in part to the pass-through effects of lower global oil prices. In the monetary sector, broad liquidity improved; however, external reserves fell slightly, due to the seasonal hike in foreign currency demand.

Initial data from the Ministry of Tourism for the seven months of 2015 showed total visitor arrivals contracting marginally, by 1.0% to 3.8 million, relative to 2014’s 2.9% expansion. However, in a continuation of the strengthening observed since January, 2014, the high value added air segment firmed by 5.0% to 0.9 million, outpacing the 2.8% gain recorded in the prior period. Meanwhile, last year’s 2.9% upturn in the dominant sea component was reversed to a 2.7% decline, for a total of 2.9 million visitors.

Disaggregating arrivals by port of entry, those to New Providence decreased by 9.5% to 2.0 million, vis-à-vis a 1.8% advance in the corresponding period of 2014. This outturn reflected a sharp 13.9% reduction in sea passengers, which eclipsed the 1.2% gain in the air segment. In contrast, the number of visitors to Grand Bahama surged by 30.5% to 0.6 million, a rebound from the previous year’s 8.2% falloff, as increases in both hotel and airlift capacity boosted air arrivals by 27.4%, and the dominant sea component improved by 31.1%. Buoyed by respective gains in air and sea passengers, of 9.5% and 1.3%, visitors to the Family Islands rose further by 2.3% to 1.2 million, following the year-earlier 10.1% expansion, aided by the start-up of a new mid-sized resort operation.

Provisional hotel sector data from the Ministry of Tourism and the Bahamas Hotel and Tourism Association, for the January to July period, confirmed the sustained growth in tourism output relative to the same period of 2014. Total room revenue rose by 4.0%, based on increases in the average occupancy rate, by 4.3 percentage points to 75.9%, and the average daily room rate (ADR), by 6.7% ($16.82) to $268.36.

Domestic inflation for the twelve months to June, as measured by the All Bahamas Retail Price Index, advanced to 1.41%, from 0.87% in the previous year. Underlying this outturn, average price gains quickened for recreation & culture and health (by 6.7 and 5.5 percentage points to 7.0% each), for education (by 2.2 percentage points to 4.2%), alcohol beverages, tobacco & narcotics (by 1.9 percentage points to 5.9%), communication (by 1.8 percentage points to 2.5%) and food & non-alcoholic beverages (by 1.6 percentage points to 3.0%). Similarly, average prices for furnishing, household equipment & maintenance, and housing, water, gas electricity & other fuels—the most heavily weighted component in the index—were higher by 4.6% and 0.2%, a reversal from respective year-earlier contractions of 0.6% and 0.7%. In contrast, inflation slowed for miscellaneous goods & services (by 3.8 percentage points to 0.2%), restaurant & hotels (by 0.2 percentage points to 2.8%) and clothing & footwear (by 0.2 percentage points to 3.20%), and fell for transportation, by 1.9%, vis-à-vis a 3.8% advance in 2014.

Amid the protracted decline in global oil prices over the last twelve months, average gasoline costs decreased by 2.0% in August, on a monthly basis, and by 26.5% relative to the prior year, to $4.02 per gallon. The average cost of diesel also moved lower, by 2.7% to $4.75 per gallon over the month and by 6.3%, year-on-year. A similar outcome was observed for the domestic fuel charge, which decreased by 1.5% over July’s rate and fell sharply by 36.4% vis-à-vis August 2014, to 15.49 cents per kilowatt hour (kWh).

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