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Monthly Economic and Financial Developments, December 2005

Published: Tuesday January 31st, 2006

The Bahamian economy's expansionary trend was sustained during December, underpinned by heightened construction activity and ongoing firming in private sector demand. Initial data suggests that tourist arrivals declined marginally over the January to October period, as the sector continued to recover from the effects of 2004's hurricanes. For the year, however, domestic output expanded, reflecting growth in construction activity, robust domestic demand and ongoing investments in the tourism sector.

Preliminary year-to-date October tourism data indicate a reduction in visitor arrivals to The Bahamas of 2.1% to 4,220,840. Overall, air visitors grew by 2.3%; however, arrivals by sea declined by 4.0%. In New Providence, arrivals increased slightly by 0.4% as an 11.2% rise in air tourists countered a 5.0% decline in sea passengers. Grand Bahama’s tourism performance remained subdued, as total visitors to the island receded by 15.7%, reflecting contractions in both air and sea traffic. In contrast, Family Island arrivals rose marginally by 0.2%, led by higher air visitors (1.3%), while sea tourists were relatively unchanged.

Consumer price inflation for 2005 stood at 2.2% versus 0.9% a year ago, mainly reflecting higher costs for medical and health care, education as well as food and beverage items.

For the first five months of fiscal year 2005/06, preliminary data for Government’s budgetary operations indicated that the overall fiscal deficit improved by $13.2 million to $50.0 million. Total tax revenue firmed by 16.1% to approximately $420.4 million, on account of increases in import and related stamp taxes. However, total outlays advanced by 14% to $504.5 million, due to gains in both current and capital expenditure.

During the review month, Government signed a Heads of Agreement for a $3.7 billion resort project to be undertaken in West End Grand Bahama by The Ginn Company. This project is expected to revitalize Grand Bahama's tourism sector, with numerous spin-off benefits for the entire Bahamian economy.

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