The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A top accountant yesterday said there was no rejoicing in the Bahamas' "positive but lacklustre" 0.2 per cent GDP growth in 2016, arguing that 4-5 per cent nominal annual expansion is needed to dent unemployment.

Gowon Bowe, the Bahamas Institute of Chartered Accountant (BICA) president, told Tribune Business: "If you compare the GDP revised for 2015 to GDP revised for 2016, the growth was 0.2 per cent in real terms, which means you take out the impact of inflation.

"The significance of that is that previously we had said that the economy had contracted, and it was a negative growth. Now they have revised these numbers for the period 2012-2016. It is no growth to rejoice over, but where it was previously reported in the Budget contributions and others that the growth rates in the Bahamas was zero and negative, this is now saying that actually when you do it on a revised basis there was positive growth even though it was lacklustre."

According to the Department of Statistics' 2016 national accounts report, Bahamian GDP grew marginally by just 0.2 per cent in 2016. The department released revised data for GDP between 2012 through 2016, consistent with a revision of major data sources, the implementation of revised United Nations Systems of National Accounts, and a shift to using the double deflation methodology in the constant price series.

According to the revised figures, real GDP growth was -0.6 per cent in 2013, -1.2 per cent in 2014 and -3.1 percent in 2015, the year Value-Added Tax (VAT) was introduced. However, in nominal prices that strip out inflation, growth went from a negative -0.4 per cent in 2013 to 1.6 per cent in 2014 and 3.7 per cent in 2015. Officials noted that the GDP level in 2012 was $8.4 billion and now stands at $10.7 billion, a 27.6 per cent increase.

"They have taken the size of GDP from $8 billion to $10 billion. All of our debt-to-GDP ratios, our deficit-to-GDP ratios and all of the other ratios that factored into GDP, would have been improved; not because of an improvement in the debt or the deficit, but because the economy was a bit larger," Mr Bowe said.

"This has significant implications, and therefore the trustworthiness and the veracity of these numbers are going to be important because they could be seen as sort of positive contributors to some of our metrics, and we want to make sure it is justified."

Mr Bowe added: "These numbers have to show that they can withstand any challenge or scrutiny, and if they do withstand that what it does show is that VAT has contributed to better information about the Bahamian economy than we had before, where we were doing far more what I would call guesstimation, whereas we are now doing better estimation."

Department of Statistics officials said GDP in constant prices for 2016 had a growth in real terms of 0.2 per cent. Industry growth at constant prices was due mainly to increases in the industries of construction, 24 per cent; wholesale/retail, 7 per cent; and business services of professional and technical nature, 6 per cent.

"The number still isn't anything to rejoice about," said Mr Bowe. "In order to have any significant decline in unemployment we need to be growing between 4-5 per cent in nominal terms. What this actually represents is 0.2 per cent in real terms.

"If we say inflation is about 2 per cent in nominal terms, we probably grew at about 2.2 per cent, and that is still far below where we need to be for making a meaningful dent in unemployment and economic activity. All it says is we weren't technically in a recession like the previous information indicated, but in reality we are still not going anywhere near the rate we need to be."