For a better view on Central Bank of The Bahamas, Update Your Browser.

Monthly Economic and Financial Developments (MEFD) October 2020

Published: Monday November 30th, 2020

Domestic Economic Developments


During the month of October, domestic economic developments continued to be largely impacted by the spread of the Novel Coronavirus (COVID-19) and imposed containment measures. Against this backdrop, the tourism sector remained basically offline, with both the high value-added air segment and the dominant sea component on pause. Nonetheless, foreign investment-led projects, combined with hurricane rebuilding works, provided some impetus to the construction sector. In price developments, the domesitc infaltion rate narrowed during the twelve months ending August, reflecting the reduction in fuel costs. On the fiscal front, the overall deficit widended considerably during the first quarter of FY2020/21, as the two major economic shocks associated with COVID-19 and Hurricane Dorian, led to a notably decline in total revenue and a rise in aggregate outlays. Monetary developments recorded a rise in bank liquidity, reflective of a contraction in domestic credit, which exceeded the falloff in the deposit base. Similarly, primarily attributed to net public sector debt inflows, external reserves increased markedly during the review month.

Real Sector


  1. data suggests that monthly tourism output remained contracted, largely reflecting the impact of internationally imposed travel restrictions related to COVID-19, which unfavourably affected both air and sea arrivals. However, domestic demand supported gains in the vacation rental market.

The most recent data provided by the Ministry of Tourism (MOT) revealed that total foreign arrivals by first port of entry were 98.6% less than in September 2019, extending the 12.2% decrease in the same period last year when Hurricane Dorian impacted. Specifically, the virtual absence of air and sea visitors compared with hurricane induced losses of 14.7% and 11.8% last year.

All major island groupings reflected these trends, although the Family Islands had incrementally better relative experience than New Providence and Grand Bahama. In New Providence, arrivals matched less than 1.0% of the previous year’s outcome, with only a slightly better outcome for Grand Bahama. However, Grand Bahama’ air arrivals reached 28.2% of the 2019 levels. For the Family Islands, the air arrivals matched 39.6% of last year’s results, although weighed down by the absence of cruise traffic, total arrivals were at only 3.1% of the 2019 volumes.

On a year-to-date basis, activity remained contracted, as total foreign arrivals reduced by 68.0%, vis-à-vis a 10.5% growth during the same period last year. Underpinning this outturn, air arrivals declined by 72.4%, following a gain of 11.6% in the previous year, while sea visitors fell by 66.6%, relative to a 10.1% advance in 2019.

In terms of traffic through the country’s main gateway, data provided by the Nassau Airport Development Company Limited (NAD) revealed that total international departures fell to 4,794 passengers, during the month of October, overturning the 1.7% uptick to 91,115 a year earlier. On a year-to-date basis, total foreign departures declined significantly by 71.7%, a reversal from the 14.2% expansion in the prior year. By region, the U.S component, which is higher by volume, reduced by 72.7%, a turnaround from the 15.5% growth recorded in 2019. Similarly, the non-U.S. international component contracted by 64.8%, contrasting with a 6.2% increase a year earlier.

Data provided by AirDNA revealed positive movements in the short term vacation rental market for the month of October, favoured by domestic tourism demand. In particular, total room nights sold rose by 19.6%, a turnaround from the 19.9% decline during the same period in 2019, supported by improvements in entire place listings (21.6%) and hotel comparable accommodations (14.7%). Similarly, the average daily room rate (ADR) for both entire place listings and hotel comparable listings increased by 3.9% and 1.0%, to $369.13 and $143.63, respectively. On a year-to-date basis, total room night sold contracted by 46.6%, as bookings for entire place listings and hotel comparable reduced by 47.8% and 36.1%, respectively. Pricing data varied, as the ADR for entire place listings grew by 2.9% to $401.95, while the ADR for hotel comparable listings fell by 2.3% to $150.86.


Attributed to the pass-through effects of the decline in global oil prices, domestic consumer price inflation—as measured by changes in the average Retail Price Index for The Bahamas—narrowed to 0.5% during the twelve months to August, from 2.9% in 2019. A disaggregation by category revealed that average costs for housing, and water, gas, electricity & other fuels and clothing & footwear decreased by 1.2% and 1.1%, respectively, following gains in 2019. In addition, the average price decline for communication extended to 2.1% from 1.8% a year earlier. Further, average inflation rates moderated for transport (1.9%), furnishing, household equipment & maintenance (1.5%), food & non-alcoholic beverages (0.5%), and miscellaneous goods & services (0.3%). Providing some offset, the increase in average costs accelerated for health (8.9%), alcoholic beverages, tobacco & narcotics (4.1%) and recreation & culture (0.7%), while average price for restaurants & hotels stabilized at 5.1%.


Preliminary data on the Government’s budgetary operations for the first quarter of FY2020/2021, revealed an increase in the deficit to $336.3 million, from $48.8 million in the comparable FY2019/2020 period, reflective of a notable falloff in revenue collections and a rise in spending, mainly for social welfare related to the COVID-19 pandemic. Specifically, total revenue contracted markedly by $251.4 million (45.5%) to $300.9 million, while aggregate expenditure rose by $36.2 million (6.0%) to $637.2 million.

The reduction in total revenue was led by a $229.3 million (46.0%) decline in tax revenue to $269.5 million. In particular, taxes on goods and services decreased by $197.3 million (52.2%) to $180.6 million, largely attributed to the falloff in value added tax (VAT) receipts, to $134.7 million from $266.2 million in the previous fiscal year. In addition, taxes on international trade and transactions fell by $31.2 million (28.3%), given the reduction in departure taxes. Further, non-tax revenue reduced by $22.0 million (41.3%) to $31.4 million, underpinned by a $10.3 million retrenchment in receipts from the sale of goods & services, led by declines in immigration and customs fees.

Expenditure growth was owed primarily to a $35.1 million (6.4%) rise in recurrent outlays to $579.8 million, reflective of a surge in disbursements for social assistance benefits, to $80.5 million from $37.9 million a year earlier. Likewise, increases were registered for subsidies ($11.0 million) and interest payments ($5.0 million). In contrast, payments for employee compensation contracted by $10.7 million to $166.5 million, primarily reflecting a $10.1 million decline in allowances, whilst outlays for goods and services moderated by an equivalent amount to $98.9 million. Capital expenditure edged up by $1.1 million (2.0%) to $57.4 million, as the acquisition of non-financial assets rose by $2.8 million (7.4%), led by a rise in spending on bridge repairs and maintenance and machinery & equipment. Conversely, capital transfers fell by $1.7 million (9.3%) to $16.6 million.


For full text reading, please download the attached document.