The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Trade Commission’s chairman has pledged that the country’s national trade policy will not be “Nassau centric” as it seeks to complete consultation on the initiative by month’s end.

Philip Galanis told Tribune Business the Commission had made it a priority to seek input from all Family Island Chambers of Commerce to ensure the policy reflects the needs, interests and aspirations of the private sector and communities beyond New Providence.

Confirming that recommendations will be submitted to the Government once consultations conclude, he said: “The National Trade Policy is being reviewed by a number of social partners, including Chambers of Commerce on all islands.

‘‘One of the things we’re doing is meeting with all island Chambers to get their input into trade policy so that it is not Nassau centric, so that it is a policy which reflects the aspirations, hopes and support of all islands of The Bahamas and is really national in scope. We hope to complete that exercise in October, and then make recommendations to the Government about the National Trade Policy.”

Mr Galanis continued: “We are in the process of organising a meeting with the Chamber of Commerce, and have asked the trade unit at the Ministry of Economic Affairs to organise a meeting with all the Family Island Chambers of Commerce. One of the things we’re acutely aware of is that we tend to be Nassau centric, and we really need a trade policy that reflects the input of the Family Islands as well.

“We’re trying to have consultations completed by the end of this month so we can send recommendations on to the Government. That’s where we are. We’re working very hard on it, and have got a lot of responses on it.”

The draft National Trade Policy revealed that tourism’s “collapse” at COVID-19’s peak “exposed the fragility” of The Bahamas’ current economic model by producing rare twin goods and services trade deficits worth a combined $1.7bn. It disclosed that the pandemic-induced economic lockdown and border closures virtually wiped out tourism earnings that had produced a $311m total trade surplus just one year before.

This nation’s economic model has traditionally relied on services exports, chiefly tourism and financial services, to generate foreign currency surpluses to cover the multi-billion dollar annual trade deficits incurred on physical goods. While this system worked reasonably well prior to COVID, the resulting $3.2bn plunge in 2020 services exports created huge shortfalls on both the goods and services sides that combined for an overall deficit “higher than in any recent years”.

Asserting that trade will play a pivotal role in repositioning the Bahamian economy for the post-pandemic “new normal”, the National Trade Policy report said: “In the pre-COVID period, The Bahamas’ large services trade surplus was roughly sufficient, and increasingly so, to counterbalance the goods trade deficit.

“The strong performance of services, in particular the tourism sector, helped The Bahamas to achieve a combined goods and services trade surplus for the first time in 2019, at $311m. However, the COVID-19 pandemic caused a collapse in services exports in 2020 to $1.3bn from $4.5bn a year earlier, less than the services imports of $1.4bn in that year.

“The impact of the pandemic was thus a dual goods and services trade deficit with a combined value of $1.7bn, higher than any deficit in recent years and exposing the fragility of the country’s current trade model, which is based on a very narrow export base.”

The $133m services trade deficit incurred in 2020 represented a major departure from prior year outcomes, which almost always produced surpluses - meaning The Bahamas earned more income than what it spent on importing services - ranging from $1.218bn to $2.637bn between 2016 and 2019.

As an import-dependent country, relying on the outside world for most of what it consumes, the National Trade Policy report said COVID-19 had revealed the vulnerability of a Bahamian economic model that has grown to increasingly rely on tourism - “one of the globally most affected sectors by the pandemic” - to finance these purchases via its annual foreign currency earnings.

“Trade has an important role to play in the new normal,” the report added. “But for this to happen, The Bahamas needs a coherent National Trade Policy which aligns with the broader development strategy, and to avoid a piecemeal approach of uncoordinated and sometimes conflicting measures affecting the country’s exports and imports of goods and services.

“Such a trade policy has so far been lacking in the country, which may at least in part explain the long-term declining trend that trade has played for The Bahamas. Up to the mid-1990s, trade in goods and services was equivalent to more than 100 percent of GDP, compared to the less than 80 percent in recent years.”

Underscoring the near-total reliance on tourism, the National Trade Policy continued: “Up to 2019, travel services accounted for about 90 percent of the country’s total services exports – in 2019, $4.1bn out of $4.5bn. In 2020, the impact of COVID-19 changed the pattern: Travel services exports contracted by 67 percent, from $4.1bn to less than $1bn, and transport services export by 46 percent.

“Data for the first quarter 2021 showed no recovery: Travel services exports stood at $327m compared to $834m in the first quarter of 2020. Conversely, exports of business services remained stable and, as a result, the share of business services in total services exports increased to 16.7 percent, whereas that of travel services decreased to 77 percent.”

Travel exports plummeted to $967m in 2020 compared to the prior year’s $4.1bn, while transportation earnings fell from $82m to $44m. Other business services, though, remained relatively flat at $210m compared to $207m for the prior year, which the report said showed the value in The Bahamas developing a “diversified services export portfolio”.