Monthly Economic and Financial Developments, January 2007

Published: Wednesday February 28th, 2007

Preliminary indications suggest continued growth in the domestic economy during January, supported by ongoing construction activity and tourism-related investment expenditures. Public sector foreign currency loan proceeds were a key factor behind the gain in external reserves, and there was a mild improvement in liquidity conditions as credit growth abated.

Based on the latest available tourism statistics, for the month of October 2006, visitor arrivals declined by 14.2% to 297,646. For New Providence, which accounts for 54% of the market, visitor traffic contracted by 24.2%, an outturn largely explained by weakness in the dominant sea component. Grand Bahama experienced a 4.9% decrease in arrivals, as the 23.1% fall in air traffic surpassed the 2.1% gain in sea-visitors. Family Island tourists firmed by 5.6%, occasioned by accretions to air (12.5%) and sea (4.8%) arrivals.

During the final quarter of 2006, consumer price inflation firmed to 2.36% from 1.36% in the comparative 2005 period. The most significant cost increases were recorded for "other" goods and services (8.2%), food and beverages (4.3%), medical care and health services (3.0%) and recreation and entertainment services (2.7%). In contrast, some softening in average prices was registered for furniture & household operation (1.8%), housing (1.3%) and education (0.5%).

In the fiscal sector, the overall deficit narrowed by 62.9% to $26.4 million during the first six months of FY2006/07, benefiting from a 14.8% rise in revenue collections to $626.0 million, which outpaced the 5.9% gain in expenditures to $652.3 million. Stamp taxes associated with a share purchase transaction underpinned a 12.3% hike in tax income, and higher collections of fines, forfeits and administrative fees boosted non-tax receipts by 56.3%. The 28.2% hike in capital spending reflected increased outlays on road construction projects and asset acquisitions, and there was a more modest 2.5% advance in current spending.

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