Monthly Economic and Financial Developments (MEFD) October 2023

Published: Monday December 4th, 2023

Domestic Economic Developments

Overview

Preliminary indications are that during October, the domestic economy maintained its growth trajectory, albeit at a moderated pace, with economic indicators returning closer to the expected medium-term potential, as the recovery from the COVID-19 pandemic neared completion. Tourism output remained buoyant, supported by gains in both the high value-added air traffic and sea passengers, on account of aggressive promotion of the destination, and the ongoing elevated 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—moderated during the twelve months to August, 2023, as the rise in international oil prices slowed, vis-à-vis the same period last year. Monetary trends for October were marked by a contraction in banking sector liquidity, as the reduction in the deposit base, outpaced the decline in domestic credit. In addition, external reserves decreased during the review month, on account of net foreign currency outflows through the private and public sectors.

Real Sector

Tourism

Monthly data suggested that in October, tourism sustained its robust growth momentum, with healthy gains in both the high-value air component and sea traffic. The aggressive marketing efforts of The Bahamas, have reinforced, continued elevated demand for travel in the aftermath of the Pandemic.

Official data provided by the Ministry of Tourism (MOT) showed that total visitor arrivals rose to 0.57 million in September, from 0.47 million in the comparative period of 2022. Specifically, the dominant sea segment increased to 0.50 million, from 0.40 million passengers in the previous year. In addition, air traffic stabilised at 0.07 million—representing 130.2% of the pre-pandemic high that was recorded in 2019.

A breakdown by major port of entry showed that, total arrivals to New Providence expanded to 0.22 million visitors, from 0.20 million in the year prior. Supporting this outcome, sea passengers advanced to 0.16 million from 0.14 million a year earlier, while air traffic steadied at 0.06 million visitors. In addition, foreign arrivals to the Family Islands rose to 0.30 million, from 0.24 million in the prior year, as respective sea and air arrivals totalled 0.29 million and 8,823. Further, arrivals to Grand Bahama amounted to 0.04 million, surpassing the 0.03 million registered in the preceding year, as sea and air visitors measured 39,831 and 2,068, respectively.

On a year-to-date basis, total arrivals strengthened to 7.2 million visitors, vis-à-vis 4.8 million in the corresponding 2022 period. Contributing to this outcome, air arrivals increased to 1.3 million passengers, from 1.1 million in the prior year, reflecting gains in all major markets. Likewise, sea arrivals accelerated to 5.9 million, from 3.7 million visitors in the previous year.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) indicated that total departures in October—net of domestic passengers—grew by 19.6% to 0.10 million, compared to the same period last year. Specifically, U.S. departures increased by 20.2% to 0.09 million, while non-U.S departures rose by 16.5% to 0.015 million, vis-à-vis the prior year. On a year-to-date basis, total outbound traffic advanced by 25.2% to approximately 1.3 million passengers. In particular, U.S. departures moved higher by 25.3% to 1.2 million visitors, relative to the same period in 2022. Likewise, non-U.S. departures increased by 24.4% to 0.2 million visitors, compared to the corresponding period last year.

Positive trends were affirmed in the short-term vacation rental market. The latest data provided by AirDNA showed that in October, total room nights sold moved higher to 149,549 from 115,152 in the corresponding 2022 period. Underlying this outturn, the occupancy rate for entire place listings firmed slightly to 52.9%, from 51.7% a year earlier. Conversely, the occupancy rate for hotel comparable listings fell marginally to 50.2% from 51.1% in the previous year. Further, price indicators revealed that year-over-year, the average daily room rate (ADR) for entire place listings rose by 6.5% to $543.08 and for hotel comparable listings, by 3.5% to $195.16.

Prices

Average domestic consumer price inflation—as measured by the All Bahamas Retail Price Index—moderated to 4.4% during the twelve months to August, from 4.9% in the comparative 2022 period, as the rise in international oil prices slowed, relative to the same period last year. Specifically, average costs for transport declined notably to 2.3% from 14.7% and for communication, to 0.4% from 11.3% in the prior year. Further, average inflation moderated for restaurants & hotels (7.3%), clothing & footwear (2.7%) and education (1.0%). Providing some offset, average costs increased for recreation & culture (14.1%), alcohol beverages, tobacco & narcotics (7.1%) and housing, water, gas, electricity & other fuels (4.8%); and average prices for miscellaneous goods & services firmed to 1.7%, following a 1.3% falloff in 2022. In addition, average inflation quickened for food & non-alcoholic beverages (9.6%), health (6.0%) and furnishing, household equipment & routine household maintenance (3.9%).

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