Monthly Economic and Financial Developments, December 2010

Published: Wednesday February 2nd, 2011

Domestic economic conditions maintained a stable path during the month of December, amid the slow recovery in the global economy, which supported modest improvement in the main tourism sector. However, output in the construction industry remained weak, given subdued levels of foreign investments and domestic private sector projects. In this context, there appears to be little change in employment conditions and the Government’s overall deficit widened over the first five months of fiscal year 2010/11. Monetary developments showed a modest build-up in bank liquidity, while seasonal demand factors resulted in a slight contraction in external reserves.

Tourism sector output improved steadily over the recent ten-month period. Total visitors grew by 14.4% to 4.3 million, extending the 5.4% hike of 2009. The outcome was dominated by an 18.2% rise in sea traffic and a 4.3% rebound in the high value-added air segment. Disaggregated by port of entry, arrivals to New Providence rose by 8.3%, supported by respective gains of 4.1% and 10.8% in the air and sea components. The 41.4% expansion in visitors to Grand Bahama was attributed entirely to the 55.1% hike in cruise visitors, which overturned the 6.9% contraction in air traffic. Visitors to the Family Islands firmed by 14.9%, benefitting from double digit growth in both the air and sea segments, of 13.5% and 15.1%, respectively.

Data from a sample of hotels in New Providence and Paradise Island reported total revenues rising by 6.2% year-on-year. Average occupancy rates increased by 1.7 percentage points to 62.6%, and the average daily room rate rose by 1.9% to $231.96.

Government’s budgetary operations for the initial five months of FY2010/11 showed a deterioration in the overall deficit, by $59.1 million (42.4%) to $198.6 million, over the corresponding period a year earlier, as the falloff in aggregate revenue outpaced the marginal reduction in total spending. Aggregate receipts contracted by $75.1 million (14.0%) to $460.3 million, led by a $63.0 million decline in non-tax revenues, owing mainly to a $65.5 million (77.1%) decrease in income from “miscellaneous” sources to trend levels, following the one-time receipt of significant revenues from the sale of a local entity in the prior period. Tax collections also decreased by $16.5 million (4.9%), as stamp taxes related to property sales and other “miscellaneous” taxes fell by $25.9 million and $17.7 million, respectively. The $16.0 million (2.4%) decline in total expenditures to $658.9 million was explained by a $31.2 million (61.1%) contraction in net lending. Current expenditures firmed by $14.1 million (2.5%), associated with increases in transfer payments (4.4%) and purchases of goods & services (10.7%); while capital spending rose by $1.1 million, as a $12.9 million hike in the acquisition of assets, related to land purchases from an oil company, eclipsed a $10.5 million decrease in outlays for infrastructure works.

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