MEFD November 2008
Published: Friday January 2nd, 2009
Indications are that domestic economic activity continued to weaken during November, amid the deepening effects of the global economic meltdown. The outlook for tourism remained weak, hampered by uncertainty in US households’ finances; and the foreign investment climate depressed, owing both to tight credit markets and the negative short-term outlook on projects’ returns. Despite recent significant reductions in global crude oil prices, domestic inflation continued to firm, reflecting the lagged effect of earlier price increases on finished goods and transportation costs. Meanwhile, monetary developments featured a reduction in liquidity and external reserves, as faster credit growth outpaced firmer gains in the deposit base.
In the tourism sector, although cumulative data for the first nine months of 2008 indicated a 5.8% improvement in hotel room revenues, the more recent slump in performance was highlighted by a 37.7% falloff in comparative receipts for the month of September. This was largely explained by a one-third decline in occupied hotel room nights, alongside a 6.3% drop in average nightly room rates. While the average room rate appreciated by 9.4% on a year-to-date basis, room night sales contracted by 3.3%. The industry slowdown was broad-based, with New Providence properties experiencing a 36.9% reduction in September revenues, cutting into a 10.6% cumulative gain for the first nine months of the year. In Grand Bahama, where September losses were estimated at 37.1%, room revenues declined on a year-to-date basis by 18.7%. Meanwhile, the Family Island surveyed properties experienced a nearly 50 percent contraction in revenue during September and 6.8% reduction for the year-to-date. While reduced room sales featured all of the trends, September pricing discounts were estimated at 4.5% for New Providence, 3.5% for Grand Bahama and 34.7% for the Family Islands.
Reflecting broad-based price increases, inflation during the twelve-months to November advanced by 1.90 percentage points to 4.4%. The largest cost increases were noted for furniture and household operations (6.8%), other goods and services (6.8%), food and beverages (6.3%), medical care and health (5.0%), transport and communications (3.4%) and housing (3.3%); while gains of less than 3.0% were registered for the remaining categories. In contrast, as oil prices continued to trend downwards, the average retail cost of gasoline in New Providence declined on a monthly basis, by 21.2% to $4.05 per gallon and diesel by 20.0% to $3.89 per gallon. These compared to respective prices of $4.56 and $3.97 per gallon in November 2007.