The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Chamber of Commerce’s (BCCEC) chief executive yesterday said it would be “a stretch” for this country to generate even 2-2.5 per cent economic growth for 2013, although he expressed hope that last year’s 5.5 per cent decline in commercial loan arrears was a “sign of things to come”.

While the International Monetary Fund (IMF) last night projected that the Bahamas would achieve 2.7 per cent GDP growth, Winston Rolle said he felt the economy would struggle to match last year’s expansion rate - let alone the Government’s more optimistic predictions of 3 per cent growth.

“I don’t see it,” Mr Rolle told Tribune Business. “I still say a 2-2.5 per cent growth rate will be a stretch to make. What evidence do we have that that’s reasonably achievable?”

While such a growth rate was a noble goal, the BCCEC chief executive questioned whether 2012’s economic performance gave any indication, or confidence, that the Bahamas could achieve it in 2013.

Mr Rolle acknowledged, though, that even a 2.5 per cent GDP growth rate “can’t do it” when it came to expanding the economy at a rate fast enough to absorb both the existing 25,000-30,000 unemployed workers, plus the 3,000-5,000 school leavers that join the workforce every year.

“To really start reducing those numbers, we need to look at growing employment opportunities. I’m not an economist, but we need to growing at 3-4 per cent per year. That’s my take,” Mr Rolle told Tribune Business.

The Central Bank of the Bahamas’ monthly economic report for December exposed just how weak the Bahamian private sector, in general, continues to be, with credit demand anaemic amid tightened bank lending requirements.

The report noted that credit extended to the Bahamian private sector fell by $39.7 million in 2012, compared to a $114.3 million expansion the previous year. Commercial loans contracted by $30.3 million, compared to a $79.8 million expansion in 2011.

“The challenge is that we still don’t have an environment where persons are confident that the economic turnaround has expanded to the point where they’re prepared to contemplate making an investment,” Mr Rolle told Tribune Business.

“That’s one of the challenges we have to overcome, not only from an international perspective, which is where we always focus, but a local perspective as well.

“The local business community needs to feel that any investment they incur gives them ample opportunity for a return.”

Mr Rolle added that the Bahamian real estate and construction industries had yet to rebound to the extent the business community needed, or expected.

The Bahamas has consistently relied on the construction sector to soak up semi-skilled and unskilled labour, and the BCCEC chief executive said it was also vital to generating increased confidence through other sectors of the economy.

“From a confidence perspective, when people see new construction taking place, it gives them the feeling something is going on,” Mr Rolle added.

While some $270.8 million worth of commercial loans to the Bahamian business community were in arrears at year-end 2012, that figure actually represented a $15.9 million or 5.5 per cent reduction on the previous year’s figure.

Commercial loans in arrears in excess of 90 days decreased by $8.1 million (4 per cent), and 31-90 day delinquencies moved lower by $7.8 million (8.9 per cent), according to the Central Bank of the Bahamas. This was despite commercial loan arrears rising by $12.6 million (4.9 per cent) in 2012.

While acknowledging that the high level of commercial loan arrears would further depress economic activity and a private sector-led recovery, given that affected businesses would have difficulty hiring new staff and expanding, Mr Rolle also took comfort from the year-over-year arrears decline.

“That’s a positive sign. Let’s hope that’s a sign of things to come, and we look forward to more improvement in 2013,” he told Tribune Business.