NASSAU, BAHAMAS — Tourism will remain the primary economic driver for this nation for the foreseeable future, according to a local economist and University of The Bahamas (UB) lecturer.
Rupert Pinder said economic diversification is not a short to medium-term reality as he addressed the Rotary Club of West Nassau yesterday.
He said: “Tourism will remain the driver of this economy for the foreseeable future. Any discussion with respect to diversification in the short to medium term is really academic in my view. You can not make that pivot n a relatively short period of time. You can create greater linkages.”
“I think rather than focusing on diversification the focus ought to be on value-added,” Pinder said.
“How can we create greater value-added for the economy, how can we get more foreign reserves and increase foreign exchange earnings and move away from some of this sexy talk about diversification?”
Pinder noted that with the Bahamian dollar pegged to the US dollar and the United States is the country’s major trading partner as well as its major tourism source market, this nation will remain susceptible to external shocks
“In the short to medium term we need to focus on opening this economy in a safe and responsible way in my view,” said Pinder.
Pinder also lauded the Central Bank for its efforts to protect the country’s foreign reserves.
On the issue of dollarization, Pinder said: “The issue is far more complex than most people really understand. Most who talk about it perhaps fail to appreciate that we already have somewhat of a dollarized economy.
“The extent to which we have pegged our currency to the US dollar provides a degree of stability and predictability that augers well for foreign direct investment. When you talk about dollarization, every Bahamian note in circulation will have to be replaced by US dollars.” Pinder noted that with the country already under a serious financial strain, the country lacks the US dollars required for a one-to-one conversion.
