NASSAU, BAHAMAS — The World Bank is estimating that The Bahamas will see economic growth of eight percent this year, with a slight slowdown to 4.1 percent in 2023.
The eight percent mark is the third highest in the Latin American and Caribbean region.
The World Bank in its Latin American and the Caribbean Economic Review titled “New Approaches to Closing the Fiscal Gap”, which was released yesterday noted that The Bahamas will see an estimated eight percent growth this year, 4.1 percent in 2023, and three percent in 2024.
Its estimated eight percent growth this year is directly behind Barbados’ second-place 10.5 percent growth and oil-rich Guyana with the highest projected growth at an estimated 57.8 percent.
The World Bank’s report also noted that fiscal policies across the region to support vulnerable households and firms during the COVID-19 pandemic eroded the little fiscal space gained by countries in the region in previous years.
“The Caribbean was hit particularly hard,” the bank said.
“Dominica, Saint Vincent, St. Lucia, and the Bahamas all have relatively large deficits, with deficits in the first two countries still exceeding six percent. Overall, in the region, progress has been made in reducing primary deficits (as a percentage of GDP). They have fallen by 0.96 percentage points, on average, across 2022. However, rising interest payments have led to overall deficits similar to those in 2021.”
The World Bank noted that the region’s forecasted growth rates have been consistently upgraded since January—in contrast to the downgrades of the rest of the world.
“LAC is thus closing the gap with global estimates pulled down by the war in Ukraine. Though net importers of food and fuel, such as the Caribbean and Central American countries, have been severely affected, and rising prices of these goods have stressed households across the region, the overall rise in commodity prices has been a boon to regional exporters such as Argentina, Brazil, Chile, Colombia, Ecuador, and Peru,” the World Bank reported.
It further contended that the region appears reasonably resilient in the face of overlapping challenges.
“Debt burdens are increasing with global borrowing rates, but the lower dollar exposure in borrowing in the region and a stronger reserve position have left international ratings relatively stable,” the bank said.
“Further, to date, the concerns about hidden non-performing loans for firms and consumers have not materialized in most countries. A significant fraction of loans in many countries were reprogrammed or ‘evergreened. Some will become non-performing, which may divert lending from more productive activities. Governments will also need to streamline debt resolution mechanisms that are currently unwieldy and monitor systemic soundness.”
