Monthly Economic and Financial Developments (MEFD) December 2020
Published: Monday February 1st, 2021
Domestic Economic Developments
Overview
During the month of December, domestic economic activity continued to be dominated by the spread of the Novel Coronavirus (COVID-19). In this context, globally imposed containment measures impeded tourism sector activity, as the high value-added air component recorded historically low levels of visitors, while the sea segment remain at a standstill. Nonetheless, ongoing foreign direct investment projects and post-Hurricane rebuilding works provided stimulus to the construction sector. In terms of prices, the domestic inflation rate narrowed during the twelve months to November, reflecting a decline in fuel costs. Monetary developments registered a moderation in the growth of bank liquidity during the review month, with the contraction in domestic credit outstripping the reduction in the deposit base. However, external reserves expanded, bolstered by net public sector debt inflows.
Real Sector
Tourism
Tourism output indicators remained sharply contracted, as ongoing internationally imposed travel restrictions to contain the spread of COVID-19, negatively affected both air and sea arrivals. Nevertheless, domestic demand supported seasonal gains in the vacation rental market.
The most recent data provided by the Ministry of Tourism (MOT) revealed that total foreign arrivals reduced by 97.9% in November, relative to a 7.3% growth during the same period in 2019. Specifically, air traffic decreased by 89.4%, extending the 12.5% falloff in the prior year. Similarly, sea passengers declined by 99.6%, a reversal from the 12.5% gain a year earlier.
A disaggregation by market, revealed that total visitors to New Providence matched just 1.6% of the prior year’s outturn, amid declines of 99.8% and 94.2% in the sea and air components, respectively. Similarly, total arrivals to Grand Bahama corresponded to 4.2% of the previous year’s volumes, as air traffic reached 80.7% of last year’s results. For Family Islands, total visitors matched a mere 2.6% of the 2019 levels, with air passengers corresponding to 33.1% of the preceding year’s levels.
On a year-to-date basis, activity remained contracted, as total foreign arrivals fell by 73.1%, a turnaround from a 9.9% growth in the prior year. Contributing to this outturn, air arrivals reduced sharply by 74.5%, following an 8.2% gain in 2019. Similarly, sea arrivals declined by 72.6%, vis-à-vis a 10.4% rise last year. See Table 1 for the eleven months to November, 2020 visitor arrivals by Island.
In terms of traffic through the country’s gateway airport, data provided by the Nassau Airport Development Company Limited (NAD) revealed that total international departures fell to 21,040 passengers, during the month of December, overturning the 9.9% increase to 140,633 passengers in 2019. For the year, total foreign departures decreased markedly by 74.2%, a reversal from a 12.8% growth in the prior year. By market, the U.S component, which is higher by volume, declined by 75.2%, contrasting with a 14.0% improvement last year. Likewise, the non-U.S. international component was lower by 67.8%, after a 5.7% expansion a year earlier.
Short-term rental data provided by AirDNA, revealed positive activity within the market throughout December, buttressed by domestic demand. In particular, compared to 2019, total room nights sold rose by 27.0%, although a moderation from the 50.8% increase in the prior year, as entire place listings and hotel comparable accommodations grew by 28.3% and 25.4%, respectively. However, pricing indicator outcomes were mixed, as the average daily room rate (ADR) for entire place listings firmed by 5.1% to $474.12, while hotel comparable listings fell by 0.8% to $162.30. For all of 2020, total room nights sold still declined by 46.9%, given the importance of international travel, reflecting a 47.8% falloff in bookings for entire place listings and a 38.6% reduction in private room listings. Pricing data varied, as the ADR for entire place listings grew by 4.6% to $412.07, while the ADR for hotel comparable listings decreased by 1.0% to $152.88.
Prices
For the twelve months to November, domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—moderated to 0.1%, from 2.5% in 2019, reflective of the pass-through effects of lower global oil prices. A disaggregation by category showed that average price for transport decreased by 2.8%, for clothing and footwear, by 1.3% and for housing, water, gas, electricity & other fuels, by 1.1%, after registering gains in 2019. Further, the average cost decline for communication extended to 4.0% from 1.3% a year earlier. In addition, average inflation rates slowed for furnishing, household equipment & maintenance (1.9%), alcohol beverages, tobacco & narcotics (3.4%), restaurants & hotels (4.5%) and miscellaneous goods & services (1.6%). Providing some offset, average inflation rates quickened for health (5.9%) and food & non-alcoholic beverages (1.2%), while average price reductions moderated for recreation & culture (0.1%) and education (3.4%).
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