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Monthly Economic and Financial Developments, November 2004

Published: Monday January 3rd, 2005

Compared to the same month last year, the economy experienced strong growth during November, amid healthy seasonal strengthening in tourism, and re-insurance inflows which further stimulated construction activity. The latest available data on tourist arrivals, for October, suggest a steady seasonal uptrend for New Providence and the Family Islands, with dissipating losses in Grand Bahama and Abaco. Rising domestic demand and private sector spending was evident from the more substantial monthly growth in consumer credit and residential mortgages and a significant expansion in foreign currency purchases by the private sector. Non-bank involvement with the Government's net financing activities, however, resulted in a falloff in the monetary and credit aggregates. 

Cumulative data for the first eleven months of the year continue to indicate an expanded economic contribution from tourism in 2004, with an accompanying increase in domestic consumption and investment expenditures. Mainly owing to the cruise component, total visitor arrivals in the first 10 months of 2004 improved by 11.6%, led by a 24.2% increase in Grand Bahama arrivals and a 12.7% gain for New Providence. Visitor growth of 3.5% was recorded in the Family Islands, linked to increased capacity in the stopover segment.

Tourism expenditure gains are expected to firm in 2005, supported by expanding airline capacity from the United States and Europe, and steady income and employment growth in the important visitor markets. While the continued weakness of the US dollar should also sustain enhanced marketing and pricing opportunities for the industry, downside risks in the outlook include the energy price inflation in travel costs and rising interest rates that could slow the United States' growth momentum.

As regard the fiscal sector, tourism growth is expected to support a steady improvement in Government revenue, which nevertheless will continue to trail the pace of overall economic expansion in the short-term, owing to the increased significance of customs duty exempted capital goods imports linked to foreign investments and hurricane repairs.