QER June 2022
Published: Wednesday September 14th, 2022
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2022. 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 the domestic economy maintained its growth trajectory during the second quarter of 2022, although continuing adjustments to the ongoing Novel Coronavirus (COVID-19) pandemic. Tourism output further strengthened, undergirded by sustained gains in the high value-added air segment and a rebound in sea traffic, as vaccination efforts progressed. In addition, several small to medium-scale foreign investment projects, and to a lesser extent, public sector post-hurricane rebuilding works, supported activity in the construction sector. In price developments, inflationary pressures remained elevated, reflective of the pass-through effects of higher global oil prices and a rise in the costs for other imported goods.
Provisional estimates for the final quarter of FY2021/2022 showed that the Government’s overall deficit narrowed, relative to the same quarter for FY2020/2021. Contributing to this outcome, was a value added taxes (VAT) led growth in total revenue, combined with a reduction in aggregate expenditure. Budgetary financing was obtained from both domestic and external sources, which included the issuance of a $385.0 million bond on the international market.
Monetary developments featured a buildup in bank liquidity, with the expansion in the deposit base, contrasting with the falloff in domestic credit. Correspondingly, external reserves expanded, with inflows to liquidity and deposits reflecting both the Government’s external borrowing activities and net foreign currency receipts from real sector activities. In addition, banks’ credit quality indicators improved in the second quarter, underpinned by the modest recovery in the economy and ongoing loan write-offs. Further, the latest available data for the first quarter of 2022, revealed that domestic banks’ overall net income expanded significantly, explained by a reversal in the provisioning for impaired loans.
On the external side, the estimated current account deficit narrowed during the second quarter, as the services account surplus strengthened, bolstered by the recovery in tourism earnings. In contrast, the financial account inflows decreased, owing to a notable decline in net private investments and a reduction in other investment inflows, partly due to loan repayments by the Government. Meanwhile, the capital account transfers reported nil transactions, similar to the prior year.
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