Date of Release: 4 April 2005
Moderately accelerated domestic credit trends and increased private sector demand suggested strengthened domestic economic activity during February 2005 as compared to the same month in 2004. However, external sector inflows moderated, as tourism activity in Grand Bahama remained significantly below trend. The most recent data for January 2005 reveal that, although tourist arrivals outpaced the previous year, air arrivals contracted, owing to a sizeable falloff in Grand Bahama activity.
On a cumulative basis, through the first two months of 2005, economic activity also firmed compared to 2004, with continued healthy bank financing for construction. The latest fiscal trends underscore an improvement in Government revenue since Hurricanes Frances and Jeanne, resulting in a less marked difference in the cumulative deficit for the first seven months of the fiscal year at $96.6 million, compared to $80.9 million during the same months of FY2003/04. Given the outlook for continued expansion in tourism and foreign investments, support for the fiscal sector is expected to firm over the remainder of FY2004/05.
On February 14, the Central Bank reduced the Discount Rate by 50 basis points to 5.25%, and commercial banks reduced the Prime rate from 6.00% to 5.50% on February 15. Some softening in lending rates noted since then, is expected to provide added stimulus for credit expansion during 2005 and result, consequently, in more tempered growth in foreign reserves and liquidity.
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