Anemic GDP growth, stats reveal
The Bahamas’ gross domestic product (GDP) grew marginally, by just 0.2 percent, in 2016, the Department of Statistics’ report on GDP revealed yesterday.
The department released revised data for GDP between 2012 through 2016, consistent with a revision of major data sources, the implementation of revised United Nations Systems of National Accounts, and a shift to using the double deflation methodology in the constant price series.
According to the revised figures, real GDP growth -0.6 percent in 2013, -1.2 percent in 2014 and -3.1 percent in 2015, the same year value-added tax (VAT) was introduced.
This is consistent with the stagnant growth reported by the International Monetary Fund (IMF).
It was previously reported that The Bahamas’ GDP retracted by 1.66 percent in 2015, after shrinking by 0.52 percent the previous year.
The marginal growth of 0.2 percent in 2016 was attributed to a 24 percent increase in construction, a seven percent increase in wholesale and retail trade and a six percent increase in business services of a professional and technical nature.
According to the department, GDP is $10.7 billion.
In his 2016/2017 budget communication, then Prime Minister Perry Christie slashed a full percentage point off the Bahamas’ projected economic growth for 2016, cutting real GDP expansion estimates to just 0.5 per cent.
At the time, Christie also revised the projections for 2017 to expand by just one percent.
The cuts forecast came just months after the IMF projected that the economy would expand by 1.5 per cent in both years.
In 2016, the IMF observed that the Christie administration’s budget estimates for revenue were too robust, and those for expenditure were not robust enough.
A consistent cry of the Free National Movement (FNM) in opposition was that the Christie administration exaggerated fiscal projections.
During his recent budget communication, Minister of Finance Peter Turnquest, the deputy prime minister, accused the previous administration of incompetence, generating zero or negative growth in the Bahamian economy for four consecutive years after the 2012 election.
This month, the IMF projected that this country’s real GDP growth will pick up to 1.75 percent in 2017 and to 2.5 percent in 2018, driven in part by a strong U.S. economy, the phased opening of Baha Mar and related construction activity.
The IMF added that post-hurricane reconstruction following Hurricane Matthew last year and an uptick in foreign direct investment-financed projects, should also support The Bahamas’ economic recovery.
Government debt mushroomed to $6.5 billion under the previous administration.
The government has said it is committed to its ambitious agenda, but it will set about it in a fiscally responsible manner to ensure there is a steady reduction of the annual deficit and government debt is reduced to a more desirable level.
The Minnis administration has also committed to facilitate more “expeditious reduction and elimination of the GFS deficit”.
To that end, legislation to formally create the Department of Inland Revenue and strengthen government’s power and revenue collection is expected to make its way to Parliament.
The FNM pledged to remove VAT on bread basket items, electricity, water, medical services, insurance and children’s clothing, but upon coming to office its said the government’s fiscal constraints has delayed those plans until the country is on better financial footing.
However, the government has provided few specifics on its plan to spur jobs activity, create new industries and expand the country’s products beyond tourism and financial services, though bullet points of these intentions can be found in the FNM Manifesto 2017.