The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Improvements to workforce productivity and the ease of doing business are critical to boosting economic output with Bahamian GDP forecast to expand in "the low 2 percent range" in 2024.

John Rolle, the Central Bank's governor, yesterday said better performance in those two areas is essential "to increase the economy's growth potential" as The Bahamas slowly reverts to the annual average 1-2 percent gross domestic product (GDP) growth it had become used to prior to the COVID-19 pandemic.

With the economy having "recovered beyond its pre-pandemic levels" in 2023, driven by surging tourism and foreign direct investment, he told the regulator's quarterly economic briefing: "In 2023, it is estimated that the economy grew in the 4 percent range, which is a levelling off from the significant post-pandemic recovery of around 14 percent in 2022.

"This captured a very robust boost in the cruise sector’s contribution, a completion of the occupancy recovery in the stopover sector and healthy appreciation in the average pricing for stopover accommodations among both hotels and vacation rental properties.

"In 2024, the growth is expected to be within the low 2 percent range - still moderately above the estimate of the economy’s medium-term potential. In this regard, along with sustained marketing efforts, the momentum in the hotel sector, where room availability is still temporarily reduced, remains contingent on how occupancy rates and pricing strengthen.

"The vacation rental segment, meanwhile, has more growth headroom from both occupancy and pricing gains, and cruise market prospects remain robust." Mr Rolle's GDP growth estimate sits squarely between, and in line with, the recent 2.3 percent and 1.8 percent projections by the International Monetary Fund (IMF) and the World Bank, respectively.

And he suggested that The Bahamas could still enjoy a period of "accelerated" growth in the future once hotel industry room inventories are restored to full capacity so that they can fully accommodate high visitor demand.

"The Central Bank expects that growth in 2024 and beyond will settle further to more closely resemble The Bahamas’ longer term potential, although a future period of acceleration could occur after hotel capacity is replenished in New Providence," the Governor added.

"With credit expansion likely strengthened, the external reserves and bank liquidity levels could moderate, though both remaining very robust. In the meantime, the environment is also supportive of continued reduction in the fiscal deficit and of more local currency sourcing of the residual net financing needs

"While the Central Bank's monetary policy stance is to continue to accommodate firmer credit growth, there is still room for vigilance given the downside risks to the international economy - most notably in the form of the the wars in Eastern Europe and the Middle East, which could impede tourism and lead to a protracted fight against inflation."

Meanwhile, the Central Bank yesterday said approval had been given by the Government for "the revised master plan" for Royal Caribbean's beach club on Paradise Island, which is now valued at $165m.

Walker's Cay Landholding, meanwhile, has been given approval for a $200m phase two expansion that will employ 300 workers with another 150 added as the project progresses. The project's location was not identified, but it is likely Walker's Cay, the property owned by investor and underwater treasure explorer, Carl Allen. The development will feature condo cottages, glamping facilities and other amenities.

As for tourism's 2023 performance, the Central Bank said: "The most recent data provided by the Nassau Airport Development Company (NAD) indicated that total departures in December, net of domestic passengers, increased by 12.9 percent to 140,000 compared to the same period last year.

"Notably, US departures [through Lynden Pindling International Airport] grew by 12.6 percent to 120,000 visitors, while non-US departures advanced by 14.2 percent to 20,000 relative to the previous year. On an annual basis, total outbound traffic expanded by 22.9 percent to approximately 1.6m passengers.

"In particular, US departures rose by 23 percent to 1.38m visitors vis-a-vis the same period in 2022. Likewise, non-US departures trended upward by 21.7 percent to 220,000 visitors relative to the comparative period last year."

Elsewhere, the Central Bank added: "In the short-term vacation rental market, however, provisional data provided by AirDNA showed that in December total room nights sold fell by 4.4 percent to 163,172 from 170,701 in December 2022.

"Underpinning this outturn, the occupancy rates for both entire place and hotel comparable listings reduced to 50.1 percent and 50.3 percent, respectively, when compared to 59.6 percent and 58.1 percent in the previous year.

"Similarly, price indicators revealed that year-over-year, the average daily room rate (ADR) for entire place listings decreased by 3.5 percent to $536.69. In a slight offset, the ADR for hotel comparable listings increased by 2.5 percent to $192.49."

The regulator continued: "For the full year, total room nights sold grew by 23.8 percent, reflective of a 28.5 percent growth in hotel comparable bookings and a 23.3 percent gain in entire place bookings. Further, the ADR for respective entire place and hotel comparable listings rose by 6.8 percent and by 4.7 percent.

"In addition, occupancy rates for hotel comparable listing and entire place listings improved by 7.7 percent and by 6 percent, respectively."