Economy continues to experience modest growth
NASSAU, BAHAMAS – Notwithstanding a continued rise in the cost of living as a result of consumer price inflation eight months after the government increase value-added tax (VAT), the economy has maintained “modest growth”, according to the Central Bank of The Bahamas.
In its most recent Monthly Economic and Financial Developments (MEFD) report for January, the CBOB said that during the 12 months to October 2018, consumer price inflation — as measured by the All Bahamas Retail Price Index — firmed by 83 basis points to 2.2 per cent, “reflecting the ongoing impact of the July 2018 hike in the VAT rate”.
The report was released Sunday.
The government increased VAT from 7.5 per cent to 12 per cent in July 2018, citing the need to meet pay off its backlog arrears and maintain its fiscal agenda.
“In terms of the components, after registering declines in 2017, average costs for restaurant and hotels firmed by 4.8 per cent; recreation & culture, by 3.9 per cent and food & non-alcoholic beverages by 2.6 per cent,” the report noted.
“Similarly, inflation rates quickened for transport (5.3 per cent) and healthcare (1.9 per cent).
“In a slight offset, accretions to average costs for the housing, water, gas and electricity — the largest component — tapered by 1.1 percentage points to 2.5 per cent, while clothing & footwear, furnishing & household equipment and education, recorded price declines during the period.”
Despite the increases in goods and service, the Central Bank noted that January saw modest growth, reflecting gains in the tourism sector and ongoing foreign direct investments projects.
As pointed out by the Central Bank, during December 2018, the rise in total arrivals represented the strongest growth in eight years.
During his national address in January, Prime Minister Dr. Hubert Minnis underscored the country’s performance in tourism, including a 9.8 per cent increase in air arrivals and a projected 21 per cent and 19 per cent increase respectively in the first quarter of this year.
In its report, the Central Bank noted that the latest data from the Ministry of Tourism indicated total arrivals rose by 10 per cent; air arrivals increased 12.7 per cent in December 2018 and arrivals by sea increased 10.1 per cent.
“A breakdown of the short-term rental data revealed that the dominant New Providence market noted gains in both the entire place and private room bookings of 23.7 per cent and 25.8 per cent respectively; although increased competition contributed to the decline in the respective average daily room rates (ADRs) by 9.0 per cent and 2.1 per cent to $266.46 and $118.18.
“Away from the capital, the majority of the listings relate to the entire place category.
“In Exuma, the inventory for this segment rose by 43.8 per cent, while the associated ADR firmed by 19.0 per cent to $406.0.
“Similarly, in Abaco and Grand Bahama, entire place listings advanced by 32.7 per cent and 50.0 per cent, respectively.
“Conversely, the ADR for Abaco and Grand Bahama contracted by 26.6 per cent to $264.49 and by 5.8 per cent to $171.01, placing them at the more affordable end of the spectrum.”