The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Prime Minister Philip Davis said official growth estimates do not accurately reflect the “true scope” of the country’s economic activity and an assessment will be done on the full economic impact of the cruise industry.

During his mid-year budget contribution, Mr Davis said although the IMF predicts The Bahamas will have a 1.7 percent real GDP growth rate in 2025, he does not believe that it takes into account the fiscal and economic value of a large segment of the tourism industry.

He said a committee has been established to assess the economic impact of the industry that has already reviewed eight private destinations and collected data that will be used to develop an “effective tax policy” for the industry.

“It is our belief that the official statistics presently available do not fully reflect the true scope of economic activity generated within The Bahamas,” said Mr Davis.

“One example is the growth in our cruise industry. We have established an inter-governmental committee entrusted with the task of assessing and analysing the economic and fiscal impacts of the cruise industry in our nation. To date, the committee has reviewed eight private destinations, and its findings will ultimately be integrated into our national economic data, thereby informing the development of a tailored and effective tax policy for the industry.”

He said the economic impact of private destinations is “akin” to megaresorts and noted that they often have higher occupancy levels than hotels.

“Many of today’s megaships have more cabins than Baha Mar has rooms. Their average occupancy per voyage exceeds 90 percent, and most of their passengers disembark at private destinations in The Bahamas, where they engage in the purchase of goods and services. The economic and fiscal impact of private destinations in The Bahamas is akin to multiple mega resorts within our nation,” said Mr Davis.

He said tourism numbers in 2024 increased by 16.2 percent and cruise passengers served as the “primary driver” of that increase growing by 20.3 percent.

“This level of growth highlights a clear trend in our tourism sector, which continues to be a major contributor to the economy. This steady upward trajectory suggests a positive outlook for the industry moving forward, reflecting growing interest and demand in our destination,” said Mr Davis.

He added that the 8.7 percent unemployment rate is the lowest it has been since 2008 and the inflation rate for 2025 is projected to be 1.6 percent.

“The latest unemployment rate published by BNSI was 8.7 percent, close to the lowest level of unemployment since 2008, and is down sharply from the peak of 26.2 percent recorded by the IMF for 2021. The rate of unemployment is expected to remain relatively stable at this lower level in the near term based on sustained growth in tourism and foreign direct investments,” said Mr Davis.

“Furthermore, The Bahamas’ most recent inflation data as at November 2024 revealed a 1 percent drop in costs as compared to a 2 percent increase during the same period in November 2023. Notable reductions were experienced for transport, and restaurants and hotels. The cost of gasoline and diesel also fell by 9.5 percent and 12.3 percent, respectively. Inflation is forecasted at 1.6 percent for 2025.”