NASSAU, BAHAMAS- A well-known accountant yesterday warned against ‘sensational predictions’ of this country’s economic future by those who may not be well versed in the country’s dynamics, arguing that it would be an insult to suggest that the Bahamian economy has been merely surviving on pure luck.
Gowon Bowe, told Eyewitness News, “It is very important that our domestic economists and financial persons take a very firm position on allowing persons on the outside to make assumptions or to predict our future and not have the inaccuracies in their analysis be challenged.”
Marla Dukharan, a regional economist and formerly Royal Bank of Canada’s (RBC) top regional economics expert recently noted during a webinar with Cayman Islands financial analysts that the collapse of foreign exchange inflows due to the tourism shutdown will leave The Bahamas with no choice but to seek the International Monetary Fund’s (IMF) financial aid by 2021.
Bowe however suggested that where Dukharan was wrong was in assuming that with the tourism industry significantly impacted, everything else would remain the same.
“When certain actions take place there are equal and opposite reactions . If our actions are methodical it can turn the tide. It is not so to say her analysis and statistics are incorrect but major issue is to assume that everything else would stay the same if we lose US dollar inflows from tourism,” said Bowe.
“I always say when S&P Moody’s and the like make their predictions about what will happen, in the absence of us having a plan to show where their theories are flawed they get greater credibility than they should. It should not simply a case of using text textbook principles to say one size fits all.
“We have more US dollars flowing through our economy than any economy in the Caribbean. As there is outflow there is also inflow. It would be an insult to suggest that the Bahamian economy survived off of sheer luck. I would say we have benefited from good fortune but also there have been Central Bank governors and ministers of finance who have made wise and prudent decisions.”
Bowe added: “We must look at our own statistics, our own diagnosis and our own predictions and understand that those types of comments are not sufficiently versed in the dynamics of our country. That’s not to say that we are so special that the theory of economics does not apply but if you looked at the Bahamas debt to GDP level and even the projected increase due to COVID-19, the foreign currency reserve and the actions being taken, it was a flawed argument to say that we would run through our foreign reserves because of the negative balance of payments. The reality is we run a significant negative balance of payments because we import a significant amount of items to support the tourists we bring I. For every action there is a reaction. What we see happening in tourism is also going to reduce our consumption level.”
According to Bowe, the Bahamas remains very much envied by ‘those on the outside’.
“We as a country have to question why it is that we as a small country are so popular with other persons who have no vested interest here. It is because we are still seen to be the crown jewel of the region and while it may seem to be very harsh we are still very much envied by those on the outside. It does not mean that we shouldn’t be prudent with our decisions and have a longer term vision but we have to be very careful when person’s conduct analysis on key performance indicators that they interpreted incorrectly. I have respect for the academic capacity of Ms Dukharan but she has made many predictions on what’s going to happen in the Bahamian economy, all negative and may have yet to come to fruition.”
Bowe noted further noted that while the country’s economy is predicted to contract by 8 to as much as 25 percent, such predictions were based on ‘imperfect information’ as the economic situation continues to unfold.