Monthly Economic and Financial Developments (MEFD) August 2023
Published: Monday October 2nd, 2023
Domestic Economic Developments
Indications are that during the month of August, the domestic economy maintained its growth momentum, albeit at a moderated pace, as the recovery from the COVID-19 pandemic neared completion and economic indicators returned closer their expected medium-term trajectory. Tourism output remained buoyant, supported by ongoing gains in both the high value-added air segment and the sea component, on account of the persistent demand for travel in key source markets. In price developments, average consumer price inflation—as measured by changes in the average Retail Price Index (RPI) for The Bahamas—rose during the twelve months to June, 2023, attributed to the pass-through effects of higher prices on imported oil and other goods. Monetary trends for the month of August were marked by a contraction in banking sector liquidity, with the expansion in domestic credit, contrasting with the reduction in the deposit base. Further, external reserves decreased during the review month, owing largely to an increase in net foreign currency outflows through the private sector.
Tourism sector output sustained its robust growth in monthly trends, reflective of healthy gains in both the high-value air component and sea traffic, as the demand for travel in key source markets persisted.
Official data provided by the Ministry of Tourism (MOT) revealed that total visitor arrivals expanded to 0.74 million in August, from 0.62 million in the corresponding period of 2022. Specifically, the dominant sea segment rose to 0.62 million, from 0.50 million passengers in the prior year. In addition, air traffic improved moderately to 0.13 million—representing 98.0% of the pre-pandemic high that was registered in 2019.
Disaggregated by major port of entry, total arrivals to New Providence amounted to 0.32 million visitors, the same magnitude as the previous year. Underlying this outcome, both sea and air traffic firmed to 0.22 million and 0.11 million, respectively. In addition, foreign arrivals to the Family Islands rose more than one-fourth to 0.37 million, as sea and air arrivals advanced to 0.35 million and 0.02 million, respectively. Further, arrivals to Grand Bahama amounted to 0.05 million, surpassing the 0.04 million recorded a year earlier, as respective sea and air passengers totalled 46,031 and 3,249.
On a year-to-date basis, total arrivals strengthened to 6.6 million visitors, vis-à-vis 4.3 million in the corresponding 2022 period. Contributing to this outcome, air arrivals increased to 1.3 million passengers, from 1.0 million in the previous year, reflecting gains in all major markets. Similarly, sea arrivals also accelerated to 5.4 million, from 3.3 million visitors in the preceding year.
The most recent data provided by the Nassau Airport Development Company Limited (NAD) indicated that total departures in August—net of domestic passengers—rose by 18.8% to 0.16 million, relative to the same period in 2022. Specifically, U.S. departures grew by 20.1% to 0.14 million, while non-U.S departures increased by 9.3% to 0.02 million, vis-à-vis the comparative period last year. On a year-to-date basis, total outbound traffic advanced by 26.8% to approximately 1.2 million passengers. In particular, U.S. departures expanded by 26.9% to almost 1.0 million visitors, compared to the corresponding period last year. Likewise, non-U.S. departures moved higher by 26.2% to 0.2 million visitors, relative to the same period a year earlier.
In the short-term vacation rental market, data provided by AirDNA also reflected positive trends during the month of August. Specifically, total room nights sold rose to 161,513 from 140,512 in the comparative 2022 period. Underlying this outturn, the occupancy rates for both entire place and hotel comparable listings firmed to 55.4% and 52.8%, respectively, compared to 55.1% and 51.9% in the previous year. Further, price indicators showed that year-over-year, the average daily room rate (ADR) for entire place listings grew by 8.4% to $549.65 and for hotel comparable listings, by 10.5% to $197.71.
Average domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—rose to 5.2% during the twelve months to June, from 4.4% in the comparative 2022 period, explained by the pass-through effects of higher global oil prices and other costlier imports. Leading this outturn, average inflation for recreation & culture accelerated to 17.3%, vis-à-vis 1.3% in the previous year. Further, average costs increases quickened for food & non-alcoholic beverages (11.0%), restaurant & hotels (10.0%), alcohol beverages, tobacco & narcotics (5.4%), health (5.3%), housing, water, gas, electricity & other fuels (4.7%) and furnishing, household equipment & routine household maintenance (2.9%); and average prices for miscellaneous goods & services firmed by 1.0%, following a decline of 1.8% in 2022. Providing some offset, average inflation moderated for transport (6.6%), clothing & footwear (3.0%), communication (1.7%) and education (1.3%).
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