Central bank of Bahamas says domestic economy recovery maintained momentum

The Central Bank of The Bahamas (CBB) on Wednesday stated the domestic economy maintained its recovery momentum in the course of the fourth quarter of final year, from the adverse effects of the coronavirus (COVID-19) pandemic.

In the Quarterly Financial Critique delivering an examination of the domestic economy’s efficiency, as properly as sectoral developments, principally in the course of the period October to December, the CBB stated tourism output continued to record robust development.

It stated such development was undergirded by healthful gains in the higher worth-added air segment and the rebound in sea visitors, reflective of the relaxed pandemic restrictions and pent-up demand for travel in the important supply markets.

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“In addition, foreign investment projects, and to a lesser extent post-hurricane reconstruction operate, continued to deliver optimistic impulses to the building sector. In cost developments, domestic inflation remained elevated more than the assessment quarter, reflective of the pass-via effects of larger worldwide oil costs and enhanced expenses for imported goods,” the CBB stated.

It stated preliminary estimates revealed that in the course of the second quarter of the monetary year 2022/23, the government’s general deficit widened, relative to the comparative quarter of the monetary year 2021/22.

“Underlying this outturn, spending recovery paced more quickly than the worth-added tax (VAT)led development in income, buoyed by enhancing financial circumstances. Budgetary financing was primarily obtained from internal sources and a drawdown in International Monetary Fund (IMF) Particular Drawing Rights (SDRs).”

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The CBB stated that monetary developments featured a contraction in bank liquidity, as the expansion in domestic credit, contrasted with the reduction in the deposit base. Correspondingly, external reserves declined, attributed to the seasonal improve in demand for foreign currency and the conversion of the IMF SDR allocations.

“Further, banks’ credit good quality indicators enhanced in the course of the assessment quarter, underpinned by the sustained strengthening in the domestic economy and ongoing loan create-offs. In addition, the most recent information for the third quarter indicated a rise in banks’ general net earnings, led by a reduce in undesirable debt provisioning.”

In the external sector, the CBB stated the estimated present account deficit narrowed in the course of the assessment quarter, due to a marked improve in the solutions account surplus, bolstered by ongoing gains in tourism earnings.

In contrast, the monetary account balance switched to a net outflow, vis-à-vis an inflow in 2021, owing mostly to a reversal in other investment transactions to an outflow from an inflow a year earlier and a surge in portfolio investment outflows, connected with residents’ buy of Government’s external bonds, the CBB stated.

CMC/