The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Air arrivals to the Bahamas declined by 3.4 per cent year-over-year for the 2013 first quarter, with both New Providence and Grand Bahama experiencing a decline in the key stopover visitor segment.

The Central Bank of the Bahamas’ report on monthly economic developments for March said that while total visitor arrivals grew by 3.3 per cent to 1.75 million for the first three months of 2013, this resulted entirely from an increase in cruise passengers and other seaborne tourists.

While the increase in cruise visitors is welcome, their per capita spending - especially in Nassau and Freeport - is in the high two to low three figures. In contrast, land-based stopover visitors typically spend more than $1,000 per head, and their business is responsible for maintaining the hotel industry as the Bahamas’ largest private sector employer.

“Preliminary data from the Ministry of Tourism showed growth in tourist arrivals of 3.3 per cent during the first quarter, to 1.75 million, down from the 10.4 per cent advance reported a year ago,” the Central Bank report said.

“Sea visitors rose by 5 per cent. However, the high value-added air segment fell by 3.4 per cent.”

The report added: “In terms of the major markets, visitors to New Providence increased by 9.8 per cent, as growth in sea passengers of 15.6 per cent outpaced a 3.7 [per cent contraction in air tourists.

“The arrivals count to Grand Bahama decreased by 5.8 per cent, owing to reductions in both the air and sea components, by 19.1 per cent and 3.6 per cent, respectively. Similarly, visitors to the Family Islands decreased by 3.8 per cent, with the 5 per cent fall-off in the dominant sea segment countering the 8.4 per cent gain in air passengers.”

The Central Bank said the tourism industry “softness” meant that the Bahamian economy was “somewhat flat” in March, although foreign direct investment (FDI) led construction activity was described as “stable”.

Its report added: “In other real sector developments, domestic energy costs increased modestly over the review month, influenced by the

elevated global oil price levels.

“In energy price developments, the average prices for both gasoline and diesel rose by 5.8 per cent and 4 per cent over the month, and by 1.1 per cent and 0.9 per cent on an annual basis, to $5.65 and $5.42 per gallon, respectively.

“Similarly, the Bahamas Electricity Corporation’s fuel charge firmed by 4.5 per cent month-on-month to 26.47 cents per kilowatt hour (kWh), and by 1.8 per cent over the previous year.”

The Central Bank added that the Bahamian economy was forecast “to maintain a mildly positive uptrend over the remainder of 2013”, aided by an expected improvement in stopover tourist arrivals and FDI-generated construction activity.

Yet it again acknowledged that there would be “muted” improvements, if any, in the Bahamas’ high unemployment rate. And this nation continued to face downside risks from the uncertain US economic recovery and volatile global oil prices, the latter of which could feed into domestic inflation.

Turning its attention to the Government’s own finances, the Central Bank said: “Progress in reining in the fiscal deficit and the debt over the near to medium-term will continue to depend, to a large extent, on the level of economic growth, as well as the success of Government’s initiatives to

increase the revenue intake and curtail expenditures.

“In the monetary sector, liquidity is projected to remain elevated, amid the outlook for continued weakness in private demand conditions and a continuation of banks’ conservative lending practices.”

And it added: “External reserves are forecast to remain above international benchmarks, although the overall outturn will depend on the balance between domestic foreign currency demand and the economy’s ability to generate receipts from real sector activities.

“As consumers and businesses face continued challenges in meeting financial obligations, private sector loan delinquencies are likely to remain elevated over the near-term.”