The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Moody’s is still predicting that the Bahamian economy will grow by 2-2.5 per cent in 2015 despite Baha Mar’s delayed opening, which will mean the $3.5 billion mega resort misses “the high season” in tourism.

The Wall Street credit rating agency, in an update that followed two days after last week’s downgrading of the Government’s creditworthiness, gave the Christie administration another small offsetting boost by reaffirming previous 2015 GDP growth forecasts.

“The economic recovery will carry over into 2015, and we expect growth to come within the 2-2.5 per cent range,” Moody’s said.

“The full opening of the Baha Mar resort was delayed and is now set for late spring next year. This implies that it will likely miss the high season. Nevertheless, we still think that Baha Mar will support growth going forward by providing greater supply of hotel rooms and contributing to the diversification of the tourism products available in the Bahamas.”

Baha Mar previously announced that it had delayed its ‘Grand Opening’ from December 2014 to late Spring next year, on the grounds it wanted to make sure it delivered the promised experience and met guest expectations.

With economic growth momentum heavily reliant on Baha Mar, many felt the delayed opening would likely impact Bahamian GDP growth, but Moody’s is sticking to the ‘consensus’ forecast previously established by itself and the likes of the International Monetary Fund (IMF).

Together with Moody’s upgrading its outlook on this nation from ‘negative’ to ‘stable’, the rating agency’s affirmation of its growth forecast is another small boost for a government desperately seeking growth and job creation.

For the recent past has not been a pleasant one. Moody’s reminded those who read its reports: “The economy expanded by just 0.7 per cent in 2013, below the post-recession average of 1.1 per cent.

“For 2014, we expect a mild recovery, supported by improving tourism numbers and foreign direct investment-led construction projects. In the first half of the year, total tourist arrivals expanded by 2.8 per cent, with higher value-added air arrivals growing by 2.6 per cent, an improvement over the 6.2 per cent contraction recorded during the same period in 2013.

“Meanwhile, the unemployment rate remains high yet falling to 14.3 per cent in May 2014 from 15.3 per cent in November 2013, and we expect employment to continue recovering over the short term.”

Moody’s reiterated that the 7.5 per cent Value-Added Tax (VAT) was vital to increasing government revenues and reducing the fiscal deficit.

“This, in turn, is expected to stabilise the debt-to-GDP ratio, which we expect will peak in 2015,” it added.

“While we consider that risks affecting the sovereign’s creditworthiness are currently balanced, downside pressure could emerge should the economy underperform, negatively impacting revenues, or if fiscal laxity hindered consolidation efforts.”