Economy growing, says a Central Bank quarterly report

Economy growing, says a Central Bank quarterly report
The Central Bank of The Bahamas. (PHOTO COURTESY OF THE CENTRAL BANK)

The Bahamas’ domestic economy grew at a modest pace during the first quarter of 2018, sustained by the recovery in the high value-added stopover segment of the tourism market and impetus from the construction sector, which benefitted from a number of foreign investment projects.

The revelation comes as part of The Central Bank of The Bahamas’ Quarterly Economic Review for the first quarter of 2018.

According to the bank’s website, there is a narrowing in the surplus during the third quarter of the fiscal year (FY) 2017/2018, owing to a tax-related reduction in total revenue, combined with an increase in aggregate expenditure.

While bank liquidity expanded during the review quarter, a noticeable contraction in private sector credit was noted.

Similarly, the growth in external reserves accelerated, bolstered by the receipt of foreign currency inflows from real sector activities and the Government’s external borrowing.

Attributed to the modest increase in economic activity, along with ongoing debt restructuring measures and loan write-offs, banks’ credit quality indicators improved.

However, the sector’s overall profitability levels for the fourth quarter of 2017 contracted, due to a falloff in interest income and higher operating costs.

On the external side, the estimated current account deficit narrowed during the first quarter, reflecting an expansion in the services account surplus, which benefitted from gains in tourism earnings.

In contrast, the surplus on the capital and financial account decreased sharply, owing in large measure to a significant decline in private investment inflows.

The report also features a review of financial services activity and its contribution to the overall economy.

The results of the 2017 survey indicated a falloff in both employment and expenditure within the banking sector, due to the consolidation of business services, outsourcing and the automation of operations.

Moreover, a more stable outcome was recorded for the insurance industry, while the credit union sector recorded a modest improvement in its operations.