NASSAU, BAHAMAS — The International Monetary Fund (IMF) is projecting that The Bahamas’ real gross domestic product (GDP) growth will be at 8 percent this year, with a full recovery to pre-pandemic levels not expected until 2024.
The IMF in its 2022 Article IV 2022 report released yesterday noted that the country’s economy contracted by almost 24 percent in 2020, as tourism receipts fell by more than 75 percent.
“Starting in the second half of 2021, air arrivals saw a steep rebound, recovering to half of 2019 levels in 2021, while cruise arrivals, that were initially more subdued, have recently ticked up (Figure 2),” it read.
“Coupled with a rebound in construction activity, output expanded by around 14 percent in 2021. Labor market conditions are improving, but remain challenging, with unemployment estimated at around 18 percent at end-2021 compared to over 25 percent in 2020.”
The IMF continued: “The recovery is expected to continue in 2022. The war in Ukraine, which adds considerable uncertainty to the outlook, will affect The Bahamas primarily through commodity prices and to a lesser extent, external demand (with growth in the main trading partners, the U.S. and Canada, expected to be robust).
“Staff’s baseline projects real GDP growth at 8 percent in 2022, supported by a continuing recovery in tourism, further strengthening of construction activity, and a pickup in domestic demand. This baseline would still leave real output about 6 percent below its pre-pandemic level in 2022, with a full recovery to pre-pandemic levels not expected until 2024.”
The IMF is projecting that average inflation will increase to 6¾ percent in 2022 given increases in imported fuel and food prices and will only gradually decrease as supply-demand imbalances wane and imported inflation declines in the fourth quarter of 2022.
“Despite high imported inflation in the short-term, staff’s baseline projects that the ongoing recovery in international tourism will narrow external imbalances over the medium term and keep international reserves at an adequate level,” the report read.
Central Bank Governor John Rolle said recently that it is expected that the Bahamian economy could be fully recovered from the economic shock of the COVID-19 pandemic over the course of next year, possibly slightly ahead of earlier projections.
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