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Monthly Economic and Financial Developments, September 2005

Published: Thursday November 3rd, 2005

During the month of September, brisk residential construction investments provided a significant contribution to domestic economic activity, as preliminary indications suggest less buoyant tourism output due largely to the adverse effects of Hurricanes Katrina and Rita. The performance for the first three quarters of the year suggests a steady level of overall expansion, underpinned by heightened construction activity and elevated consumer demand.

In August, visitor arrivals to The Bahamas contracted by 14.5%, culminating in a 6.9% reduction in the visitor count for the first eight months of the year, to 3,483,735. The weakness was most pronounced in sea arrivals, which fell by 9.1%, with a more marginal 1.9% decline in the longer stay air visitors. Persistent sluggishness in the Grand Bahamas market, following the effects of Hurricanes Jeanne and Frances last year, was evidenced in the double digit declines in both air (34.5%) and sea (20.1%) arrivals. The Family Islands also experienced a falloff in visitors, with sea and air down by 10.3% and 1.4%, respectively. These developments were cushioned by an estimated 8.5% increase in air arrivals to New Providence, which accounted for approximately 70.7% of visitors. However, as a result of a 5.3% contraction in sea arrivals, New Providence’s overall performance was relatively flat.

Consumer price inflation for the 12-months ending September 2005 rose to 1.94% from 1.24%, with the most significant cost increases recorded in the medical care & health, transportation & communication, and food & beverage items.

Preliminary estimates for Government’s budgetary operations in the first month of FY2005/06 indicated a modest surplus of estimated $0.1 million, in contrast to a deficit of $12.0 million in FY2004/05. Generally buoyant economic conditions combined with improved revenue collection protocols supported a 16.4% hike in tax revenues to $90.3 million. Total expenditure increased by 5.1% over last year to $90.3 million, and was concentrated in current outlays.

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