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Monthly Economic and Financial Developments, July 2008

Published: Tuesday September 9th, 2008

During the month of July, softness in consumer spending and construction investments continued to restrain economic output growth, amid an environment of increasing price pressures. Money and credit trends featured stable though buoyant liquidity conditions, while increased net foreign currency inflows, mainly associated with public sector borrowing activity contributed to an improvement in external reserves.

Tourism statistics for the first six months, showed a 2.2% contraction in total arrivals to 2,426,138 compared with the same period a year earlier. The outcome reflected a 3.8% reduction in the sea segment, which outstripped a 1.1% expansion in air arrivals. Visitors to New Providence fell by 5.9%, occasioned by a 12.5% downturn in sea traffic, which overshadowed the 4.8% improvement in air passengers. Grand Bahama also experienced a 14.6% contraction in visitors with both the air and sea components decreasing by 10.3% and 16.8%, respectively. Conversely, total visitors to the Family Islands grew by 11.8%, buoyed by a 16.3% rise in sea passengers, which negated a 4.8% decline in air arrivals.

Preliminary data on the fiscal performance indicated a narrowing in Government’s overall deficit for the eleven months of FY2007/2008, by 31.7% to $79.9 million from the year-earlier. Strengthened gains in revenue collections of 6.7% to $1,279.7 million were derived from a 7.4% increase in tax receipts, buoyed by growth in international trade taxes (5.3%), business and professional fees (21.4%) and other “miscellaneous” stamp taxes (12.7%). The 3.2% expansion in aggregate spending to $1,359.5 million was primarily associated with a 5.4% increase in current expenditures as capital outlays declined by 10.0%.

Domestic prices continued their upward trajectory during the review month, as gasoline and diesel costs in New Providence rose by 2.1% and 2.8%, to $5.74 and $6.07 per gallon, respectively. Average retail prices for the 12-month period ending June 2008 advanced by 0.56 percentage points to 2.99%, compared to a 0.80 percentage point gain to 2.43% in the comparative 2007 period. The most notable price gains were registered for furniture & household operations (7.15%), medical & health care (4.73%), food & beverages (4.03%), transport & communications (3.21%) and other goods & services (3.07%). Increases of less than 3.0% were recorded for all other price categories.

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