Sunday, February 01 2015 @ 09:00 AM AST
Contributed by: michaelariston
There are positive signs that the Bahamian economy performed commendably during the third quarter of 2014, supported by an improvement in the stopover segment of the tourism sector as well as on-going foreign investment-related activity. The tourism sector was boosted by improvements in key source markets and increased airline capacity. Visitor arrivals rose by 3.6% with approximately one million visitors during the first two months of the third quarter. Construction activity remains robust, supported by ongoing foreign investment projects in the tourism sector (e.g. the Baha Mar project). Private sector construction though remained subdued, constrained by banks' more conservative lending practices amid high non-performing mortgages and unemployment. Tourism accounts for more than 50% of GDP and employs more than 50% of the labor force.
Inflation in the third quarter of 2014 was at 1.4% (year on year) lower than the 3.4% recorded in the same period of 2013. Inflation in The Bahamas historically has been low, averaging 2.1% in the past 10 years. The value added tax is expected to be introduced in January 2015, as such there will be uptick in inflation as a result. However, this should be tempered by the lower fuel prices, which is heavily weighted in the retail price index. Credit quality continues to deteriorate , reflecting the subdued domestic economic conditions. Growth in delinquencies has been led by the mortgage component.