Monthly Economic and Financial Developments June 2016

Published: Wednesday August 3rd, 2016

Preliminary indicators showed that domestic economic activity remained relatively mild during the review month, amid modest impulses from the tourism sector. Also foreign investment projects continued to support output in the construction sector. Reflecting seasonal impetus from cultural events, the jobless rate narrowed during the first half of the year, although staying incrementally firmer when compared to the same period of 2015. Domestic energy costs rose marginally in June, due in part to some increase in global oil prices, while the fiscal deficit was higher over the eleven months of FY2015/16, as spending growth exceeded the value added tax (VAT)-led revenue improvement. On the monetary front, both bank liquidity and external reserves expanded during June, buoyed by net foreign currency inflows from real sector activities.

Anecdotal evidence suggests that tourism sector activity stabilized in June, as the hosting of regional sporting events, along with an increase in airlift capacity from a major market, supported high-value added stopover arrivals.

The Department of Statistics’ most recent labour force survey for May, indicated that the unemployment rate rose by 0.7 percentage points relative to May 2015. However compared to November 2015, the rate declined by 2.1 percentage points on a seasonal basis, benefiting from the staging of the Junkanoo Carnival activities. On a yearly basis, the number of discouraged workers fell by 37.5% to 2,470, while unemployment among youth—persons aged 15-24 years—firmed slightly by 50 basis points to 25.8%.

Reflecting mainly a slight upward trend in international oil prices since reaching a Iow in January 2016, domestic energy costs firmed during June. The Bahamas Power and Light (BPL) fuel charge increased by 2.3% month-on-month to 9.36 cents per kilowatt hour (kWh); although remaining 44.8% less than last year. Similarly, gasoline prices were 4.8% higher in June relative to the previous month at $4.13 per gallon, but contracted annually by 12.7%.

The Government’s budgetary operations for the eleven months of FY2015/16, showed a $37.6 million (14.8%) increase in the deficit to $291.5 million, vis-à-vis the comparable period of last year, as the $244.7 million (13.7%) expansion in expenditure to $2,032.2 million, exceeded the $207.1 million (13.5%) growth in total revenue to $1,740.7 million.

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