NASSAU, BAHAMAS — The Bahamian economy has shown signs of slower growth in the first quarter of 2025, moving closer to its expected medium-term potential.
While certain sectors, particularly tourism, faced challenges, the country continues to attract foreign investment. Central Bank Governor John Rolle, during a press conference on Monday, pointed to key areas of resilience, such as the banking sector and improvements in inflation, which support the economy’s ability to weather current challenges and remain on a positive growth trajectory.
Governor Rolle noted that the tourism sector experienced slower growth during the first quarter, primarily due to limited hotel capacity. This constraint has had a more significant impact on earnings potential compared to the previous year. “The hotel sector capacity continues to be an impediment to tourism growth,” Rolle explained. “While the cruise industry continues to thrive, the overall impact of reduced hotel capacity has been felt more significantly.”
Despite these headwinds in the tourism sector, the economy has remained buoyed by foreign investment. “The country is still attracting healthy foreign investment, which has provided a much-needed boost to construction and employment,” Rolle stated. These foreign inflows continue to support critical sectors, including construction, although overall economic growth was tempered during the first quarter of 2025.
Retail inflation showed significant moderation, a positive development for consumers. This was driven by reduced costs for imported goods and services and savings on electricity costs. “We’ve seen a significant moderation in inflation, which has helped alleviate some pressure on consumers,” Rolle noted. “This has been a welcome development, as it supports the purchasing power of Bahamians.”
Turning to the banking sector, Governor Rolle highlighted the accommodating stance of the Central Bank, which has ensured ample liquidity within the domestic banking system. This liquidity supports stronger growth in private sector credit. “We are seeing strong growth in credit expansion, especially in consumer and commercial loans,” Rolle said. “This is a positive signal for the economy, and it reflects confidence in the domestic market.”
However, the pace of residential mortgage growth has slowed compared to the same period in 2024. Despite this, the banking sector continues to show resilience. Delinquency rates for loans have improved, with the average delinquency rate for loans at least three months behind decreasing to 5.5 percent in March 2025, down from 6.3 percent in the same month last year. “The decline in delinquencies is encouraging,” Rolle commented. “It suggests that borrowers are managing their obligations better, and the risk environment for lenders is improving.”
The Central Bank also observed a reduction in net foreign currency inflows during the first quarter of 2025. However, there was a notable increase in foreign currency sales, largely driven by higher expenditures on imports of goods and services. “Gross foreign currency sales were up by 2.4 percent, reflecting a rise in the importation of goods and services,” Rolle explained. “This aligns with the observed increase in consumer and business activity in the country.”
In terms of foreign reserves, the Central Bank saw a slight growth of $171 million during the first quarter of 2025, bringing total reserves to approximately $2.8 billion by the end of April. While this is lower than the $2.9 billion recorded in the same period of 2024, Rolle assured the public that the reserves remain robust. “Our reserves are still healthy and adequate to maintain the stability of the Bahamian dollar,” he said.
Looking ahead, Governor Rolle pointed to external risks, particularly the potential impact of trade policy uncertainty and tariffs. “The downside risks facing the economy have increased, particularly with trade tensions and tariff policies impacting the U.S. and global economy,” he explained. “This could have a knock-on effect on The Bahamas, especially in terms of reduced travel demand and higher costs for imported goods.”
Despite these risks, Governor Rolle emphasized that the Central Bank is prepared to manage these challenges. “We are closely monitoring the situation and are committed to maintaining an accommodative policy stance to support private sector credit growth in 2025,” he assured. “Our priority remains to ensure that the economy stays on track and that financial stability is preserved.”
