The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must ensure “prosperity on paper trickles down” to the street level so that persons feel the impact from rising GDP in their daily lives, a well-known accountant has asserted.

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez managing partner, told Tribune Business that improved economic output (gross domestic product or GDP) post-pandemic will have little meaningful impact for “the average Bahamian” unless they, too, experience improved incomes and living standards.

Speaking after the Bahamas National Statistical Institute revealed that real GDP expanded by 13.7 percent in 2021, as the economy reflated and re-opened following the prior year’s lockdowns and COVID-related restrictions, he said: “The GDP numbers are beginning to look a bit better but, at the end of the day, because there are so many aspects to the economy, the Government and all involved have to ensure that what is seen on paper is the reality in the lives of the average Bahamian.

“One only has to drive in so many areas of New Providence to see the hurt that exists. I’m glad to see the uptick in the numbers, which indicates the increased availability of more jobs, more services and the need for employment. Over time there always has to be the appearance, and this is my mantra, that it filters down to the average Bahamian. The prosperity on paper has to filter down to the average Bahamian, the working class Bahamian.”

Mr Gomez added that it was also vital for Bahamian economic growth to match that of the country’s population so that productivity and living standards are maintained. “One reason GDP is important is that Bahamian output needs to keep up up with population growth if people want to maintain their living standards,” he said.

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.

Ken Hutton, the Abaco Chamber of Commerce’s president, said of the Institute’s findings: “I think the numbers speak for themselves. Obviously it was a double whammy, particularly for Abaco, with COVID and Dorian. It just shows that even though there’s an indication of a rising recovery, there’s certainly a much longer way to go to get to break even with where we were in 2019. It’s encouraging that we’re on the right track, and let’s hope things continue to improve.”

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.

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.”