The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday reaffirmed that The Bahamas’ economic growth rate will “moderate as the recovery from COVID-19 becomes more complete” with February’s air visitor arrivals just 2.5 percent off pre-pandemic pace.

Unveiling its report on February 2023’s economic developments, the regulator said the annual gross domestic product (GDP) growth rate will start to normalise and return to more traditional levels with this nation having regained much of the economic output lost to COVID.

“The domestic economy is expected to sustain its growth trajectory in 2023, supported by a strong recovery in the tourism sector. The pace of expansion is expected to moderate, however, as the recovery from COVID- 19 becomes more complete,” the Central Bank said, adding that unemployment levels were expected to remain above pre-pandemic numbers despite gains in construction and tourism.”

Its assessment comes immediately after the Bahamas National Statistical Institute (BNSI) unveiled data showing 2022’s real gross domestic product (GDP) was slightly higher than that for the last COVID-free year of 2019. It added that economic activity last year expanded by 11.9 percent on a nominal basis and some 14.4 percent in real terms “as business activity returned to pre-COVID 19 levels”.

The real GDP measurement, which strips out the impact of inflation, increased by $1.614bn year-over-year to $12.854bn driven largely by the strength of the continued tourism recovery. The latter was also almost $300m higher than 2019’s $12.56m real GDP number, with these figures measuring the total value of goods and services produced within an economy during a given period.

The International Monetary Fund (IMF), though, has continued to project above-average 4.1 percent real growth for The Bahamas in 2023. This assessment is shared by the Central Bank despite it identifying inflation, rising global oil prices, interest rate hikes and a COVID resurgence among the downside risks to the Bahamian economy.

“Nevertheless, new and ongoing foreign investment-led projects are anticipated to provide impetus to the construction sector, which will foster economic growth,” the regulator added yesterday. “Tourism output continued to register strong growth, undergirded by gains in both the high value-added air segment and sea traffic, as travel restrictions related to COVID-19 remained eased, and the demand for travel in key source markets increased.

“Initial data suggested that the tourism sector continued to register robust growth during the month of February, surpassing pre-pandemic levels. The performance continued to benefit from relaxed pandemic-related conditions and heightened demand for travel in key source markets.

“Official data provided by the Ministry of Tourism showed that total passenger arrivals rose to 0.8m in February from 0.4m in the corresponding period of 2022. In particular, the dominant sea segment more than doubled to 0.7m from 0.3m visitors in the prior year. In addition, air traffic stabilised at 0.1m, exceeding pre-pandemic levels and representing 97.5 percent of the air arrivals recorded in 2019.”

Breaking these numbers down, the Central Bank said: “Disaggregated by major ports of entry, total arrivals to New Providence doubled to 0.4m from 0.2m in the previous year. Contributing to this outcome, the sea component advanced to 0.3m visitors from 0.1m in 2022, while the air segment rose to 0.1m from 79,496 in the preceding year.

“Further, traffic to the Family Islands strengthened to 0.4m visitors from 0.2m in the prior year owing to gains in the sea and air components to 0.4m and 30,112, respectively. Similarly, foreign arrivals to Grand Bahama totalled 39,467 visitors, surpassing the 13,230 registered in the previous year, as respective air and sea passengers measured 4,927 and 34,540.

“On a year-to-date basis, total arrivals recovered to 1.7m compared to 0.7m in the comparative 2022 period. Supporting this outcome, air arrivals grew to 0.3m passengers vis-à-vis 0.2m a year earlier, reflecting gains in all major source markets. Similarly, sea arrivals increased more than two-fold to 1.4m visitors from 0.6m in the prior year.”

As for activity at Lynden Pindling International Airport (LPIA), the Central Bank said: “The most recent data provided by the Nassau Airport Development Company (NAD) affirmed the positive momentum in stopover business, as total departures - net of domestic passengers - increased by 51.9 percent to 121,919 in February, as compared to the corresponding period of 2022.

“Specifically, US departures moved higher by 46 percent to 101,705, while non-US departures nearly doubled to 20,214. On a year-to-date basis, outward-bound traffic expanded by 58.8 percent to 250,084 passengers. In particular, US departures rose by 54.9 percent to 208,942 visitors compared to the previous year. Likewise, non-US departures grew by 82.1 percent to 41,142 vis-à-vis the same period last year.”

On the vacation rental front, the Central Bank added: “Data provided by AirDNA on the short-term vacation rental market mirrored these positive trends. Specifically, during the month of February, total room nights sold moved higher by 51.2 percent to 148,726 nights. Correspondingly, the occupancy rates for both entire place and hotel comparable listings increased to 66.3 percent and 63.6 percent, respectively, vis-à-vis 55.2 percent and 50.7 percent in the previous year.

“Further, price indicators showed that year-over-year, the average daily room rate (ADR) for entire place rose by 9.6 percent to $533.56 and, for hotel comparable listings, by 8.6 percent to $196.91.” Domestic consumer inflation for the 12 months to end-January 2023 rose to 5.7 percent, compared to 3.2 percent for the same period to January 2022, due to higher oil costs and prices for other goods and services.