The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday touted IMF projections showing the Bahamas’ real economic output will expand by $600 million under his administration, while admitting the economy is still not growing fast enough to “absorb” a rapidly-expanding labour force.

Perry Christie, unveiling the Government’s mid-year Budget statement in the House of Assembly, labelled the International Monetary Fund’s (IMF) “around 2 per cent” GDP growth projections for the Bahamas in both 2015 and 2016 as “somewhat conservative”.

He based his optimism on the $3.5 billion Baha Mar project’s opening, plus the IMF’s decision to revise its US growth projections upwards by 50 basis points to 3.6 per cent for 2015.

Together with the impact from lower global oil prices, Mr Christie said this was likely to translate into increased US consumer spending and confidence - all of which bodes well for the Bahamian tourism industry and foreign direct investment (FDI) inflows.

“To an extent, our growth prospects are even better than the projections by the IMF,” the Prime Minister told the House of Assembly.

He was, though, quick to concede that 2 per cent GDP growth rates will not be enough to create the jobs necessary to absorb a labour force that is swelled each year by at least 3,500 high school graduates.

Still, ever the optimist, Mr Christie put a ‘positive spin’ on this admission. “Real growth on the order of 2 per cent in the near term, while still below the higher rates of economic expansion that we require to absorb our growing labour force, has not been experienced in the Bahamas in almost a full decade, so it comes as excellent upbeat news indeed,” he told the House of Assembly.

Tribune Business previously revealed how the IMF projected that the Bahamas needed to achieve a 5.5 per cent average annual GDP growth rate in the five years to 2018 if it was to both slash its existing 15.7 per cent unemployment rate by 50 per cent, plus absorb all new workforce entrants.

The Fund’s 2015 and 2016 growth projections show the Bahamas has not even achieved 50 per cent of this required growth rate, notwithstanding the Prime Minister’s optimism, implying that this nation will be stuck, with high, structural unemployment for some time.

Still, Mr Christie said Baha Mar’s opening, coupled with the improved US economic outlook and construction-related boost from other major resort/real estate projects, would drive a “steady improvement” in the unemployment figures beyond 2015.

“I firmly believe we have turned the corner, and that significant, stronger growth and job prospects are now realistically in the offing,” he said.

Goading the Opposition Free National Movement (FNM), the Prime Minister added: “You’ll have an opportunity to turn the corner with me.”

Continuing the ‘political point scoring’, Mr Christie then compared the IMF’s projections for GDP growth under his 2012-2017 administration with the ‘output contraction’ experienced under the 2007-2012 Ingraham administration.

“My optimism..... is buttressed by the latest IMF forecast which, while still conservative in my estimation, shows that real output in our economy is expected to be over $600 million larger in 2017 than it was in 2012,” the Prime Minister said.

“That’s an increase of almost 8 per cent in real terms over our current five-year mandate.”

Mr Christie urged FNM MPs “not to be bashful” over his government’s ‘achievement’, adding: “The entire country is benefiting from these numbers.

“As they used to say back in the day: A rising tide lifts all boats. In the local context, all Bahamians benefit from economic growth irrespective of party affiliation.”

The Prime Minister said the IMF’s 2012-2017 projections stood “in sharp contrast” to the economic contraction experienced when the FNM was in office from 2007-2012.

Mr Christie said Bahamian GDP shrunk by $239 million over that period, or by 3 per cent in real terms, as he dismissed the fact the former Ingraham administration had to contend with the sharpest, deepest global recession in living memory.

“We could speak till thy kingdom come about the greatest recession and greatest depression,” he said, glossing over the principal reason why the Bahamian economy contracted under the previous government.

More importantly, the statistics quoted by Mr Christie also show the Bahamian economy in a much less impressive light than he may want to let on.

Subtracting the $239 million ‘contraction’ under the FNM from the $600 million output increase forecast under his administration suggests that Bahamian GDP will only have grown by a net $361 million over the decade to 2017 - an average of a paltry $36.1 million per year.

That, in itself, shows why the unemployment rate remains persistently high post-2008, and why economic growth cannot match the pace of labour force expansion and create enough jobs.

The Prime Minister’s optimism yesterday, though, knew no bounds: “The evidence is overwhelming and the conclusion irrefutable: Although we have faced extremely challenging economic circumstances, my Government’s plan of action is bearing fruit and the prospects for our economy and for job creation have brightened enormously because of our policies and our initiatives aided, of course, by the brightening prospects for growth in the US economy.

“Things are going only going to get better, I am convinced, as we move forward with our growth and fiscal consolidation agenda. That is why I have confidence and optimism in our future.”