NASSAU, BAHAMAS- The Bahamas’ economy grew by 3.6 percent in 2025, unemployment fell to 9.3 percent, and the national deficit narrowed to just 0.5 percent of GDP, according to the government’s 2026 Pre-Election Economic and Fiscal Update.
The Ministry of Finance says the performance reflects steady economic momentum, supported by strong tourism activity and foreign direct investment, despite a backdrop of global uncertainty.
Inflation remained relatively moderate at 2.3 percent in the twelve months to December 2025, driven mainly by price increases in restaurants and hotels, along with household goods and maintenance costs.
However, external risks persist, with ongoing geopolitical tensions and rising oil prices continuing to pose potential threats to growth and inflation.
Looking ahead, the International Monetary Fund projects economic growth will slow to 2.2 percent in 2026 and further stabilize at 1.9 percent in 2027.
On the fiscal side, the government reported continued progress in deficit reduction, with total revenue for FY2024/25 rising to $3.396 billion, a 10.7 percent increase over the previous year, while the deficit narrowed significantly.
For the first eight months of FY2025/26, revenue increased by 3.5 percent to $2.1 billion, while spending growth remained contained, resulting in a further improvement in the deficit compared to the same period last year.
Over the medium term, the government is targeting a budget surplus of 0.5 percent of GDP in FY2025/26, rising to 1.7 percent by FY2028/29.
Public debt is also projected to decline to 57.5 percent of GDP by FY2028/29, as part of a broader strategy to reduce debt to 50 percent by FY2030/31.
Officials note that the outlook remains subject to global economic conditions, particularly those affecting tourism demand, energy prices, and imported inflation.
