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Bahamas projects economic growth of five percent this year

Governor of the Central bank of the Bahamas (CBB), John Rolle, says the local economy continues to recover from the coronavirus (COVID-19) imposed contraction, adding that this reflects the strong rebound in tourism and ongoing support from foreign investments that include healthy demand for upscale residential real estate.

Regarding the economic outlook, Rolle said the economy is projected to grow at a healthy pace of at least five percent in 2022, and gains are also expected in 2023, continuing to reflect a bounce back from COVID-19.

“In this environment, it is important to continue lay a foundation for sustained and strengthened growth, particularly beyond the COVID-19 recovery phase. This would impact the speed at which the unemployment rate falls to below pre-covid levels, and the pace at which the government’s finances improve.”

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He said in the meantime the Central Bank’s varied initiatives remained focused on boosting the domestic financial sector’s near- to medium-term support for economic activity.

“This includes a renewed push for adoption of the Bahamian digital currency, particularly to impact inclusion and efficiencies in underserved communities in the Family Islands. We also anticipate progress with the proposed moveable collateral registry, which would help improve the ease of access to credit for business purposes.

“Further reforming exchange control remains in the mix, continuing to emphasize those aspects of policies that affect the ease of doing business and long-term investments. Given downside risks to the economy, policy changes targeting portfolio investments and liquid financial flows continue to require a very gradual approach, as these would have a more immediate impact on our ability to maintain the currency peg,” Rolle added.

The Central Bank governor said the investments in residential real estate and in commercial tourism developments, are providing steady support for the construction sector. Alongside the economy’s recovery, outlook for the government’s finances has also steadily improved.

But Rolle said the country continues to experience rising inflation, a pass-through from higher prices on imported fuel and other goods.

“The recovery is driven significantly by a return to pre-pandemic levels of tourism. In this regard, there is room for additional gains, as a result of pent-up demand for travel previously unmet, particularly during the first year of the pandemic.

“The tourism turnaround has featured both rebounded visitor volumes and steady-to-improved average pricing for stopover accommodations. Moreover, performance in the vacation rental market remains strong, with significant benefits accruing to the Family Islands.”

Rolle said the momentum in tourism is being sustained, despite other challenges in the international economic environment, which are expected to discourage some travel.

He said such headwinds are expected to reduce, but not eliminate the total economic gains being experienced, through at least the end of 2023.

CMC/

 

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