FDI expected to revive economy
Indicators reveal that the Bahamian economy will turn for the better in 2011, with foreign direct investment over the next few years expected to revive the weakened economy.
The positive news came from Prime Minister Hubert Ingraham in an address on the state of the Bahamian economy made to the Rotary Club of West Nassau at the British Colonial Hilton yesterday.
“Now there are distinct signs that the worst is over and that the tide is beginning to turn,”the prime minister said.”For example, that critical barometer of economic well being, foreign direct investment appears to have reversed its downward slide as the first six-month period in 2010 has posted an increase of 3.5 per cent over the corresponding period in 2009.”
According to the prime minister, foreign direct investment spending has been identified for the next four years, and domestic investment spending has been identified for the next three years, as the result of a number of projects.
“Together these projects have the potential of unleashing the kind of dynamism within our economy that can bring unemployment to a low level and create the economic platform which will enable us to pursue advances in education, health and social and business development, and systemic efficiencies that would substantially progress our broad national development,”the prime minister said.
A United Nations(UN) Economic Commission for Latin America and The Caribbean(ECLAC)report released in July this year reported that the net FDI for The Bahamas for 2009 was$654 million, which represented a 22 percent drop from the previous year.The Guardianreported that this was the lowest net FDI for the country since 2005.
International reserve levels were relatively strong in 2009, according to Ingraham, with an increase of$253 million in 2009 following an increase of$109 million in 2009. He said that the government’s foreign currency borrowing during fiscal year 2009-2010, coupled with weakened domestic demand were responsible for the increase.
Other positive signs of an economic recovery in the works include improvement in tourism and a reduced rate of increase in non-performing loans, Ingraham said.
“Nothing is more critical to a revival of the Bahamian economy than a revival in tourism, and year-on-year performance shows significant increases in 2010 over 2009 in six of the nine months through September. Each of the last five months represented significant improvements over the corresponding period in the previous year, in what appears to be a clear trend of tourism revival,”the prime minister said.
Ingraham added that there are still risk factors which could threaten a recovery in the Bahamian economy.
“There are threats posed by the continued economic sluggishness in Europe,”the prime minister said.”National debt issues continue to threaten several European countries with the potential of destabilizing the Euro zone and derailing the US recovery.”
The risks should not”immobilize”the country from being ready to take advantage of any opportunities that become available, according to Ingraham.
“It seems to us now that a major opportunity is emerging,”the prime minister said.