The Tribune

• GDP data shows COVID wiped out decade of growth

• Economy smaller at end of 2021 than it was in 2012

• And almost $1.5bn below pre-pandemic output

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday voiced optimism that The Bahamas’ economic performance will “surpass” that of 2019 by year-end after it was revealed that COVID-19 wiped out a decade’s worth of growth.

Senator Michael Halkitis, minister of economic affairs, told Tribune Business that the initial 2021 gross domestic product (GDP) estimates released by the Bahamas National Statistical Institute provided a “positive sign” that the end to the COVID emergency orders, lockdowns and related travel restrictions had produced a much-needed spark.

The Institute said its findings affirmed that economic activity “recovered significantly” in 2021 with real GDP expanding by 13.7 percent despite pandemic-related measures impacting much of the year. Real GDP, which strips out the impact of inflation, expanded by almost $1.2bn year-over-year, growing from $8.65bn in 2020 to $9.837bn last year.

The latter figure, though, was some 8.2 percent or close to $900m below the $10.72bn GDP that The Bahamas generated in 2012. This means economic output, or the size of the Bahamian economy, was smaller at end-2021 than it was a decade ago, meaning that COVID effectively cost this nation ten years’ GDP growth that it now has to recover.

And 2021’s economic output was also almost $1.5bn, or 13.4 percent, below the $11.355bn GDP figure for 2019 - the last year before the global pandemic, and which also included the impact from Hurricane Dorian. “According to the 2021 annual estimates, economic activity in The Bahamas recovered significantly by 15.6 percent in nominal terms and by 13.7 percent in real terms, as business activity began to show signs of recovery from the adverse effects of the COVID 19 pandemic,” the Institute said.

“However, it did not regain the same level of GDP as attained in 2019. In 2021, the total value of goods and services produced in the Bahamian economy was estimated at $11.209bn in nominal prices, and at $9.837bn in real prices.” The Institute’s 13.7 percent growth estimate is more than double that given recently by the International Monetary Fund (IMF), which pegged the economy’s 2021 expansion at 5.6 percent.

Mr Halkitis yesterday said the continued easing of the COVID restrictions that impacted 2021’s economic performance would enable The Bahamas to further recover lost ground in 2022. “I saw the numbers, and what I get is of course we’re not fully back to pre-pandemic levels,” he told Tribune Business.

“2021 did not get us back to pre-pandemic levels because for the good part, the first half even into the beginning of the second half of 2021, we were still subject to the restrictions and occasional lockdowns and all of the issues related to travel. So my belief is as we saw those begin to loosen towards the end of the year that added impetus to the growth. So, it’s a positive sign.

“We’re not back to where we were pre-pandemic. I believe, from what we’re seeing now, end of last year coming now into this year, we should see that recovery. So by the end of this year we should definitely be back ahead of pre-pandemic levels,” Mr Halkitis continued.

“The signs are positive. As you look around you see tourism is very strong, leading the economy, and construction as well is very strong. So I think the main thing is, because for maybe two-thirds of the year we were still subject to lockdowns and restrictions etc, that dampened 2021, but going from now we should, at the end of this year, you should see us surpass those levels of 2019.”

Several industries, according to the Institute’s data, enjoyed 2021 output levels that exceeded those of both 2019 and 2020. Among them was real estate, owner-occupied and rentals, which generated $1.744bn in economic activity due to surging demand from foreign buyers. This was a 4 percent rise on 2019’s $1.678bn.

Finance and insurance was flat with 2019 output, standing at $1.074bn, while the shift to remote work for many businesses and staff resulted in information and communications output expanding by 15.6 percent to $440.3m compared to $381m in 2019.

Meanwhile, wholesale, retail and motor vehicle repair services expanded by 7.4 percent to $1.643bn worth of economic output as opposed to $1.529bn in 2019. The Institute said this data was based on the “production approach”, which measures the gross value added by each industry in the Bahamian economy.

“The industries that showed the most significant recovery in 2021 were the following. Wholesale/retail trade, and motor vehicle repairs, increased by $238m (17 percent) over 2020. This was a 7 percent increase when compared to the level of 2019,” it said.

“Construction increased by $192m (38 percent) over 2020. However, when compared to the level of 2019 there was a 12 percent decline. Accommodation and food services increased by $184m (65 percent) when compared to 2020, as major hotels reopened and border closures were reduced globally. However, when compared to 2019 this industry group was 57 percent lower.

“Transportation and storage increased by $146m (61 percent) when compared to 2020 as the tourism sector began its rebound. Air traffic increased considerably, which resulted in increased demand for taxi and land transportation. When compared to 2019, however, the industry was 27 percent lower.”

Measuring household and government consumption, the Institute added: “General government consumption increased by $201m (13 percent) when compared to 2020, a direct result of an increase in purchases of goods and services. The level of government consumption, however, was 2 percent lower than what was reported in 2019.

“Household consumption grew by 23 percent compared to 2020 as businesses fully reopened and employee work hours increased. However, household consumption was still 3 percent less than the level reported in 2019.”

Turning to The Bahamas’ trade data, the Institute added: “Exports of goods and services grew by $447m (20 percent) led by the upturn in tourism expenditure, which represents approximately 65 percent of this sector. Air stopover arrivals, a component of tourism expenditure, increased considerably compared to 2020. However, when compared to 2019, it was 53 percent lower. Similarly, cruise visitors for 2021 was 75 percent less than in 2019.

“Imports of goods and services increased by $868m (22 percent) as a result of increased economic activity. When compared to 2019, however, this was $527m lower. This decrease in imports contributed positively to GDP, as imports reduce the level of GDP.

“Gross fixed capital formation increased by $462m (23 percent), which was broadly based across all components. Machinery and equipment represented $246m, followed by buildings and infrastructure which accounted for $202m of the increase.”