Monthly Economic and Financial Developments, June 2006

Published: Tuesday August 1st, 2006

For the month of June, domestic economic developments were underscored by continued expansion in foreign investment activity, and heightened growth in domestic demand, fueled in large measure by robust firming in private sector credit. The latest tourism data confirmed steady growth in stopover business over the first four months of the year, partly muted by further contractions in cruise traffic.

Tourism figures for the month of April, revealed a marginal (0.2%) increase in total visitor arrivals, compared to the same period a year ago, reflecting a 9.6% firming in air tourists, which negated the 3.7% reduction in arrivals by sea. This development stemmed principally from a 32.1% improvement in the Grand Bahama market, which recorded a 52.0% surge in sea arrivals, while air visitors rose by 5.2%. Total tourists to New Providence also rose marginally by 0.7% as the 9.8% expansion in air arrivals offset the 4.1% decline in sea visitors. In contrast, overall Family Island visitors contracted by 11.1%, reflecting a 12.7% rise in air arrivals, which was outweighed by a 15.4% contraction in the more dominant sea arrivals. Further, data for the first four months of the year revealed a 3.3% decrease in total visitors to The Bahamas to 1.8 million, due to weakened trends in the cruise segment. Total arrivals declined in New Providence (4.6%) and the Family Islands (8.0%), outstripping a 15.3% gain in the Grand Bahama market.

For the twelve months ended May, domestic retail price inflation rose to 1.9% from 1.4% in the prior year, as pass-through effects from higher energy costs persisted. The most significant cost increases were noted for food and beverages (4.0%), 'other' goods and services (3.4%), housing (2.7%), and furniture & household operations (2.0%). More modest advances were registered for medical care & health (1.7%) and education (1.6%), while average costs decelerated for transport & communication, clothing & footwear and recreation & entertainment services.

On the fiscal side, a strong boost in Government revenue, outpaced growth in expenditure, and resulted in a reduction in the fiscal deficit by almost 50% to $78.4 million in the July 05 to May 06 period. Benefiting from improving economic conditions, revenue and grants advanced by an estimated $177.2 million (19.5%) to $1,087.6 million. Tax receipts increased by $146.7 million (17.5%) to $986.9 million, as customs duties and stamp levies on imports rose by 16.7% and 17.3%, respectively, while increased receipts from fines, forfeitures and administration fees extended the gains in non-tax revenue by $37.5 million to $97.5 million. With regards to outlays, total expenditure strengthened by 10.6% to $1,166.0 million. Current expenditure rose by 9.3% to $1,020.5 million, reflecting increased outlays for goods and services, wages as well as transfers and subsidies. Moreover, capital expenditure rose by 74.4% to $100.6 million, owing to higher spending on infrastructure projects and the acquisition of land for housing developments.

For further information on the international developments and monetary trends for the month of June 2006, click on the link below.