Monthly Economic and Financial Developments, July 2014

Published: Friday August 29th, 2014

Indications are that the domestic economy maintained its modest growth trajectory over the review month, reflecting a rebound in the tourism sector and sustained foreign investment-led construction activity. Despite a reduction in global oil prices in July, price accelerations in prior periods contributed to the firming in domestic energy costs. In monetary developments, both bank liquidity and external reserves contracted, reflecting transitory cash movements related to short-term lending to the Government and the seasonal rise in foreign currency demand to facilitate current payments.

Preliminary tourism sector data for the first half of 2014 showed growth in total visitor arrivals of 2.8% to 3.3 million, outpacing the 1.4% gain in 2013. Following a 6.2% contraction in the prior year, the high value-added air segment recovered by 2.6%, whereas sea arrivals gains slowed to 2.9% from 3.7%. Disaggregated by major ports of entry, visitors to New Providence rose by 2.0% to 1.9 million, buoyed by a 2.7% increase in sea passengers, while the air component stabilized at 0.5 million. Increased airlift capacity and the opening of a new mid-sized resort in April, underpinned a sharp 31.7% spike in air arrivals to Grand Bahama. However, because the dominant sea traffic component contracted by 16.2%, there was an overall 10.3% drop in visitors to 0.4 million. For the Family Islands, the visitor count strengthened by 10.3% to 1.0 million, occasioned by growth in both sea and air visitors, of 11.7% and 1.2%, respectively.

In the context of firming global prices, domestic energy prices trended upwards in July. The average cost of both gasoline and diesel increased, by 2.0% and 1.4% on a monthly basis, to $5.58 and $5.13 per gallon, and for the year-on-year comparisons, by 5.1% and 5.6%, respectively. Similarly, The Bahamas Electricity Corporation’s fuel charge was higher by 4.6% at 25.29¢ per kilowatt hour (kWh), on a monthly basis, although 7.4% below last year’s cost.

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