Monthly Economic and Financial Developments, October 2012

Published: Thursday December 13th, 2012

Domestic economic activity continued to benefit from mildly positive developments in the tourism and construction sectors; however, the narrow base limited improvements in general employment conditions and the debt profile of the private sector. Price developments remained relatively benign over the twelve-months to August, while the fiscal situation moved further into deficit during the first quarter of FY2012/13, as capital spending-led growth in total expenditure outpaced gains in aggregate revenue. In the monetary sector, bank liquidity contracted in October, in line with seasonal increases in demand for foreign exchange and other current payments, which correspondingly led to a contraction in external reserves.

Preliminary data for the nine months to September showed total visitor arrivals improving by 8.4% to 4.5 million, with the high value-added air segment higher by 9.3% at 1.1 million, and sea traffic, by 8.1% to 3.4 million. By first port of entry, arrivals to New Providence gained 11.8% to number 2.4 million, reflecting robust expansions in both sea and air visitors, by 12.5% and 10.6%, respectively. A similar outcome was registered in the Family Islands, where the 6.6% hike in visitors, to 1.4 million, was occasioned by improvements in both sea (7.2%) and air (1.8%) traffic. More muted growth was evident in arrivals to Grand Bahama, of 0.7% to 0.6 million, as the 0.9% contraction in the dominant sea segment offset the 12.9% upturn in the air component.

Anecdotal information suggests that the impact of the hurricane on hotel performance indicators in October was relatively mild and temporary, as the majority of properties were unaffected by the severe weather conditions, and all of the main ports reopened relatively quickly after the storm had passed.

Inflation for the twelve-months to August—as measured by the Bahamas Retail Price Index—firmed by 8 basis points to 2.63%, as average costs increased for housing, water, gas, electricity & other fuels—the largest component in the Index—by 3.23%. Significant price gains were also noted for transport (3.87%), furnishings, household equipment & maintenance (3.54%), food & non-alcoholic beverages (3.17%), education (2.51%) and restaurant & hotels (2.42%). However, the majority of the other categories recorded average increases of under 2.0%, with the exception of communication costs, which declined by 0.18%.

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