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Quarterly Economic Review, June 2019

Published: Thursday September 19th, 2019

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the Second Quarter of 2019. The Review provides an examination of the domestic economy’s performance, as well as sectoral developments, principally during the April to June period.

Preliminary indications are that the Bahamian economy sustained its modest growth trajectory during the second quarter of 2019, buoyed by gains in the high value-added stopover segment of the tourist market. In addition, several varied-scale foreign investment projects provided support to the construction sector. In this environment, labour market conditions continued to gradually improve, as the number of employed persons increased, amid sustained hirings in the private sector. Further, inflation remained relatively benign over the review quarter, despite an uptick in international oil prices.

Government's budgetary operations for final quarter of FY2018/2019, featured a wider fiscal deficit, as the growth in aggregate expenditure outpaced the VAT-led rise in total revenue. Budgetary financing was mainly sourced from the domestic market, and comprised a combination of long and short-term debt.

On the monetary front, as the growth in the deposit base outpaced the rise in domestic credit, bank liquidity expanded during the second quarter, while net foreign currency inflows from tourism sector activity buttressed the moderate growth in external reserves. In addition, banks credit quality indicators continued to improve during the review quarter, underpinned by the expansion in the economy, combined with banks’ enhanced collection efforts and ongoing debt restructuring activities. Moreover, the latest available data for the first quarter of 2019, showed that banks overall profitability levels strengthened, owing in large measure to a significant reduction in provisions for bad debts.

On the external side, the estimated current account deficit narrowed considerably during the review quarter, due mainly to a reduction in the merchandise trade deficit, along with a tourism-led expansion in the services account surplus. In addition, the estimated capital and financial account surplus decreased significantly, as the contraction in net direct investment inflows, overshadowed the rise in net receipts from other "miscellaneous" investments.

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