Governor of the Central Bank of The Bahamas, John Rolle, Monday said it is likely the country experienced economic growth of between seven and nine percent last year.
Addressing the release of the Monthly Economic and Financial Developments (MEFD) for December, Rolle said the latest economic data, through the fourth quarter of 2022, indicated a continued healthy recovery of the Bahamian economy from the coronavirus (COVID-19) related setback.
He said the projected economic growth for 2022 has been mostly driven by rebounded tourism inflows and foreign investment activities also provided steady stimulus, concentrated in tourism development projects and residential real estate.
The central bank governor said the country is still in recovery mode, benefiting from significant pent-up demand for travel and capacity that is still being restored in the airline and hotel sectors.
“This will allow the economy to experience above-average growth again in 2023. While there are headwinds which have drawn out the recovery timeline, they are not likely to contract the economy in the near term.
“COVID-19 still poses downside risks, as does the cost of imported energy, imported inflation, and increasing international interest rates which are a result of central banks work to bring inflation lower. Of course, many of these developments are also driven by spillovers from the war in Ukraine.”
Rolle said while the central bank is keeping these risks in sight, “a robust and recovered foreign exchange environment, alongside the healthy outlook for external reserves, continues to justify an accommodating monetary policy posture.
“This includes tolerance for banks to expand credit to the private sector credit even if some modest reduction in the external reserves occurs in the process,” the central bank governor added.
Rolle said the economy last year imported a significant uptick in inflation, in line with cost escalation in The Bahamas’ major trading partners, and the United States in particular.
“The economic rebound has had a positive impact on net foreign exchange inflows and the central bank’s international reserves. As well, the government’s revenue recovered significantly, causing the fiscal deficit to shrink.”
John Rolle said although official data were not available, it is expected that the unemployment rate eased considerably in 2022, from the deteriorated state of the previous two years.
“Nevertheless, the pace of the labour market’s recovery still trails the gross domestic product (GDP) performance, because the recovery has, above all, had to restore jobs lost or placed on hold during the pandemic, even as new persons continued to enter the labour force.”
Rolle said with regards to the tourism momentum, the recovery, though incomplete, is considerably advanced.
CMC/
