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Quarterly Economic Review, September 2017

Published: Tuesday December 19th, 2017

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the third quarter of 2017. The Review provides an examination of the performance of the domestic economy, as well as sectoral developments, principally during the period July to September.

Preliminary information suggests that domestic economic activity was subdued during the third quarter of 2017, as the passage of several hurricanes through the region disrupted travel itineraries, resulting in a falloff in tourism sector output. However, a number of varied-scale foreign investment projects, and to a lesser extent domestic private sector and ongoing post-hurricane rebuilding work, supported activity in the construction sector. Domestic inflationary pressures were well contained over the twelve months to August; although the recent pick-up in international oil prices contributed to a rise in energy-related costs.

In fiscal developments, the deficit narrowed during the first quarter of FY2017/2018, as a falloff in capital spending led to a decline in total expenditure, while aggregate revenue recorded modest growth. Funding for the deficit was dominated by external loan financing.

On the monetary front, both bank liquidity and external reserves expanded during the review quarter, attributed to the receipt of proceeds from the Government’s external borrowings. Further, owing in large measure to one institution’s sale of non-performing loans to the Government-owned Special Purpose Vehicle (SPV), banks’ credit quality indicators improved over the review period.

Provisional estimates indicate that the current account deficit narrowed during the third quarter, reflecting a significant reduction in net income outflows, along with a marked increase in the services account surplus and a decrease in the merchandise trade deficit. In addition, the balance on the capital and financial account reversed to a surplus from a deficit in the prior year, due mainly to the Government’s external borrowing activities.

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