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Monthly Economic and Financial Developments, May 2013

Published: Tuesday July 2nd, 2013

Preliminary indicators suggest that domestic economic conditions were relatively subdued over the review month, reflecting the ongoing softness in the key tourism sector, alongside stable gains in foreign investment-led construction activity. As a consequence, employment conditions remained challenging, while the downward trajectory in international oil prices contributed to a decline in local energy costs. In the monetary sector, bank liquidity remained buoyant, amid lacklustre private sector credit activity, while external reserves contracted, due to the sustained demand for foreign currency to facilitate current payments and relatively weak receipts from real sector activities.

Provisional hotel performance indicators, obtained from a sample of large properties in New Providence and Paradise Island, showed a broad-based slump in room revenue, by 19.4% in April, year-on-year, due to a 5.5% reduction in the average daily room rate (ADR) to $257.82 per day and a 9.9 percentage point falloff in the average hotel occupancy rate to 72.0%. This outturn partly reflected a decline in room inventory at two hotels, as well as the switch in the high tourist volume Easter Holiday season, to March from April last year. In addition, indications are that tourism output fell over the first four months of the year as revenues from the properties surveyed fell by 7.0%, owing to a contraction in the average occupancy rate by 4.9 percentage points to 69.0%, which outweighed the 2.9% rise in the average daily room rate to $267.23.

With regard to energy prices, gasoline and diesel costs were down by 3.9% and 5.8% in May over the previous month, to $5.38 and $5.04 per gallon, while year-on-year, the prices of both fuels fell, by 7.1% and 6.5%, respectively. In contrast, the Bahamas Electricity Corporation’s fuel charge grew marginally, by 0.6% on a monthly basis, and by 2.2% vis-à-vis 2012 to 28.40¢ per kilowatt hour (kWh).

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