The increase in savings balances in commercial banks is likely due to increased gains in the tourism sector, according to one economist.
While Bahamian dollar deposits contracted by $45 million at the start of the year, savings balances rose by $13.4 million.
It’s a turnaround from an $8.9 million reduction in 2018, the Central Bank revealed in its Monthly Economic and Financial Developments (MEFD) report for January.
Former Minister of Finance James Smith said despite the rising jobless rate – 10.7 percent, according to the most recent Labour Force Survey – improved employment conditions mean more Bahamians are opening bank accounts.
“Bear in mind that one of the most impactful events just occurred about a year ago, which was the opening of Baha Mar, which took on about [4,000] to 5,000 new workers, all of whom were probably brand new. They probably would have been opening accounts, which would have created for them a savings,” he said.
“But you need a longer trend line to determine whether there has been absolute increase in savings rather than just a season increase.
“But if you have more people earning money for the first time, you’re [likely] to see a raise in the savings rate, even if unemployment goes higher, because you’ve got more people opening accounts in the bank.”
The Central Bank also reported the lowest rate of loan arrears in commercial banks in 10 years, as banks experienced fewer mortgage and consumer loan delinquencies.
JUMPLINE: Smith: Baha Mar likely the cause
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News