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Quarterly Economic Review, June 2016

Published: Thursday September 29th, 2016

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2016. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period April to June.

Indications are that domestic economic conditions were relatively mild. An easing in foreign investment-led activity negatively impacted the construction sector, while tourism data signaled mixed outcomes with gains in stopover arrivals contrasting with reduced visitor spending. In contrast, the economy continued to benefit from the pass-through effects of lower international oil costs, with modest declines noted in domestic prices.

The fiscal performance for the eleven months of FY2015/16 indicated an improved overall position, as total revenue growth outpaced the rise in aggregate expenditures. Budgetary financing was obtained from a combination of domestic and external sources, including a US$100 million equivalent loan and drawings on project-based borrowings.

In monetary developments, both bank liquidity and external reserves increased during the review quarter, benefitting from foreign currency inflows related primarily to real sector activities. Meanwhile, ongoing debt restructuring activities by the banking sector—as well as sales of non-performing mortgages—highlighted an improvement in banks’ credit quality indicators; although a widening in the weighted average interest rate spread was also noted.

In external trade developments, a pointed reduction in imports contributed to a narrowing of the merchandise trade deficit and eclipsed the fall-off in the services account surplus. As a result, the current account deficit was substantially reduced. Transactions also reflected a reduction in imports of building materials associated with reduced construction sector impulses, and a decrease in the use of foreign sourced construction services. In contrast, the surplus on the capital and financial account contracted, associated mainly with lower net foreign investment receipts and a reduction in banks’ net short-term external liabilities.

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