The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A FORMER Cabinet minister yesterday said that while The Bahamas’ economic growth is slowing from last year’s post-COVID rebound it is not headed for a recession.

Zhivargo Laing, former minister of state for finance, told Tribune Business that a drop-off in the country’s gross domestic product (GDP) growth in 2022 was understandable given the economy’s 14 percent expansion in 2021.

Now executive director, and senior policy fellow, at the University of The Bahamas’ (UoB) Government and Public Policy issue, he asserted that there is “no way” The Bahamas can repeat 2021’s GDP growth rate. As a result, while the pace of economic expansion is receding, this nation has not yet fallen into a recession - typically defined as two consecutive quarters of contraction - especially given that 8 percent growth is still forecast for 2022.

“If we go from 14 percent to 10 percent, we recessed. So if, by recession, people are talking about The Bahamas economy slowing down from where it was a year ago, that is going to happen. It will not grow 14 percent in 2022, and it will continue to grow less for the next couple of years. That’s been forecasted; predicted,” Mr Laing explained.

Last year’s 14 percent GDP expansion represented a rebound from the near- 24 percent contraction sparked by the COVID-19 pandemic. The Bahamas is still regaining economic output lost to the virus, but the International Monetary Fund (IMF) earlier this month revised this nation’s GDP growth prospects for 2022 upwards to 8 percent again after cutting its forecast to 6 percent back in March 2022.

That is a far cry from the definition of a recession, and Mr Laing added: “If, by recession, people mean we’re going to lose jobs and our businesses are going to go out of business, that’s not going to happen.” Michael Halkitis, minister for economic affairs, last week asserted that The Bahamas is not in recession and warned against negative talk that could make this a self-fulfilling prophecy through deterring consumers from spending.

“You are already in an economy that’s recovering from a valley downturn situation, so I think he is right about what people think about recession in terms of loss of jobs and loss of businesses. That is not where The Bahamas is headed,” Mr Laing said. “But if we’re talking about a slowing down of the economy from that extraordinary growth it was having as it was recovering out of the pandemic, it is going to recess from that.”

Tourism bookings remain strong, with the country on-pace to come near to 2019’s record pre-COVID arrivals for 2022. Mr Laing said: “From the forward bookings, to my knowledge things seem to be at least continuing on pace and recovering from that pandemic environment that we were in. So I have no information to support a slowing down and tourism now.”