Quarterly Economic Review, March 2017

Published: Thursday July 6th, 2017

The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the First Quarter of 2017. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period January to March.

Preliminary data suggests that the domestic economy stabilized during the first quarter of 2017, supported by several varied-scale foreign investment projects, along with ongoing rebuilding work in the aftermath of Hurricane Matthew, which bolstered activity in the construction sector. 

Government’s operations for the third quarter of FY2016/2017 featured a small surplus, vis-à-vis a deficit in the comparative quarter of FY2015/2016. Budgetary financing was obtained mainly from domestic sources, dominated by long-term funding. 

In monetary developments, as the contraction in deposits outpaced the slowdown in the reduction in domestic credit, bank liquidity declined during the review quarter, while the growth in external reserves moderated, reflecting the softness in the tourism sector. Attributed to loan write-offs and sustained debt consolidation efforts, banks’ credit quality indicators improved. However, banks’ overall profitability levels for the fourth quarter contracted due to a rise in bad debt provisions and higher depreciation costs. 

On the external side, the estimated current account deficit widened considerably. This outturn reflected a sharp deterioration in the merchandise trade deficit, as the growth in imports outpaced the rise in exports. In addition, the services account surplus declined, while net income payments expanded. In contrast, the surplus on the capital and financial account rose significantly, owing in large measure to a sharp increase in net “miscellaneous” investment inflows, attributed mainly to higher loan-based financing. 

The report also features a review of financial services activity and its contribution to the overall economy. The results of the 2016 survey indicated that despite the reduction in employment within the banking sector, and the increase in hurricane-related claims to the domestic insurance industry, the overall financial sector remained relatively stable, with incremental gains in expenditures, particularly the non-bank sector, which maintained positive growth trends.

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