The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank has again sounded the alarm over “constrained” tourism performance, with total stopover visitors down 6 per cent for the 2017 first half due to Freeport’s woes.

The regulator, in its monthly economic developments report for July, said the industry that accounts for around 60 per cent of Bahamian GDP continued to show “ongoing softness” regardless of Grand Bahama.

“The latest data from the Nassau Airport Development Company (NAD) also underscored constrained air visitor trends, as July’s departing visitor traffic through the main airport grew by a mere 0.6 per cent compared to a stronger 1.8 per cent uptick in the same period last year,” the Central Bank said.

“A breakdown of the components showed that passenger departures to non-US markets decreased by 5.7 per cent, reversing the 2.3 per cent gain in 2016, while the growth in the larger US component slowed to 1.4 per cent from 1.7 per cent last year.”

However, there was little disguising the impact that the Grand Lucayan’s 11-month closure, and loss of 59 per cent of Grand Bahama’s room inventory, is having on the Bahamas’ year-over-year tourism performance.

“Total visitor arrivals fell by 2 per cent to 3.3 million during the first half of 2017, vis-à-vis a 1.8 per cent gain in the comparable period of last year,” the Central Bank added.

“Underlying this outcome, the high value-added air component declined by 6 per cent, a reversal from a 2.8 per cent gain in 2016, while sea passengers decreased marginally by 0.7 per cent vis-a-vis the prior period’s 1.5 per cent growth.”

Focusing on Grand Bahama specifically, the Central Bank said total visitors to the island fell by 25 per cent during the 2017 first half, following a 5.5 per cent fall the previous year.

“Constrained by reduced room-capacity, air arrivals fell by 44.3 per cent after a 15 per cent fall in the prior year, when the appreciation of the US Dollar negatively impacted several markets,” the Central Bank said of Grand Bahama. “Similarly, sea visitors decreased by 21.5 per cent, extending the 3.6 per cent loss noted a year ago.

“In addition, visitors to the Family Islands declined further by 6.7 per cent compared to a 0.6 per cent softening last year, as the decline in sea passengers deepened to 10.2 per cent from 2 per cent. In contrast, the higher-yielding air component strengthened by 15.2 per cent.

“Led by an accelerated gain in sea arrivals of 12.8 per cent, the growth in total visitors to New Providence firmed to 6.8 per cent from 5.3 per cent. However, the key air component fell by 6.5 per cent, a turnaround from a 4 per cent increase in 2016.”

The Central Bank also highlighted a reduction in the Bahamas’ external reserves, which stood at $881.9 million at end-July 2017 compared to $1.058 billion at the same point last year. The foreign currency reserves decreased by $79.05 million in July, and $20.17 for the first seven months of 2017, compared to a $249.36 million increase for the same period in 2016.

“External reserves moved lower by $79.1 million to $881.9 million, vis-a-vis a slight $4.5 million gain in 2016, in line with the seasonal increase in foreign currency demand during the latter half of the year,” the Central Bank said of the July figures.

“Underpinning this outcome, the Central Bank sold a net of $38.5 million to commercial banks, a turnaround from the prior year’s $20.2 million net purchase, in order to meet the shortfall in their $56.4 million net sales to their customers, vis-à-vis 2016’s $8 million net receipt.

“In addition, the Bank’s net sale to the public sector more than doubled to $43.4 million, from $16.7 million in the prior year, amid increased sales to meet external debt obligations and fuel purchases.”

The Central Bank added: “The outlook for external reserves over the remainder of the year will continue to hinge on the balance between the seasonal increase in foreign currency demand for current payments and the performance of the real sector.

“The Government’s foreign currency borrowings are nevertheless anticipated to provide a boost in the near-term. Reserve adequacy indicators should therefore stay in line with international benchmarks.”