Central Bank: Construction sector to experience a slight slowdown

Central Bank: Construction sector to experience a slight slowdown
The Central Bank of The Bahamas logo.

NASSAU, BAHAMAS – The Central Bank is confirming that the construction sector may experience a slight slowdown as earlier surges in domestic construction have somewhat stalled and small to medium-sized foreign investment projects have kept the country’s construction sector steady.

“Construction sector output during the fourth quarter continued to be supported by a number of small to medium-sized foreign investment projects in both the capital and the Family Islands,” said the Bank, in its Quarterly Economic Review. “However, domestic financed activity remained relatively mild.”

Still, the domestic side recorded some jumps in activity at the end of December 2018, with total mortgage disbursements for new construction and repairs increasing by 20.4 per cent or $5.9 million to $34.8 million.

That jump represented a decline in its growth trajectory compared to the same period in 2017, which saw growth of 44.3 per cent.

“Residential flows firmed by 5.6 per cent [or]$1.6 million to $29.4 million,” the Bank added. “A slowdown from the 38.9 per cent expansion in 2017. However, gains in commercial disbursements quickened by $4.3 million to $5.4 million.”

Mortgage commitments, a significant indicator of future construction activity reported, did not establish firm growth trends, said the regulator, with un-disbursed approvals for new buildings and repairs, declined in number by 69 to 77 as the corresponding value contracted by 41.6 per cent or $5.9 million to $8.3 million.

While many FDI ventures bolstered the construction sector for 2018, the completion of some of the bigger projects may mean a falloff in activity for the sector – which heavily sway a nation’s unemployment numbers.

Deputy Prime Minister and Minister of Finance Peter Turnquest said earlier that all indicators pointed to there being a slight decline in construction this year.

“The more forward-looking indicator—total mortgage commitments for new construction and repairs—fell by 8.6 per cent to $94.7 million,” said Turnquest. “Suggesting relatively mild domestic construction activity in the near-term.”

His statements point to a surge in domestic construction to $86.7 million by Q3 2018, not necessarily being duplicated in 2019.

The numbers can suggest a loss in appetite for home ownership or, specifically, a decline in the ability by many Bahamians to be able to afford hefty mortgage payments currently.