Business

Bahamas may not see immediate contraction from US recession

As fears of a US recession loom, Central Bank Governor John Rolle said it doesn’t immediately translate into a contraction for The Bahamas.

The US economy contracted for a second straight quarter, between April and June, signaling what economists in that country have said is a clear indication of a recession on the horizon.

With The Bahamas’ economy tied so closely to US performance, fears have reached local shores.

But Rolle said during a quarterly media briefing earlier this week that the impact may be buffered for this jurisdiction.

“The interesting thing about what’s happening in the United States is that insofar as the labor market’s earnings and employment are concerned, the aggregate numbers around the performance of the US economy haven’t had as great an impact. But we should appreciate that any slowdown in the United States economy will impede or step on the ability of consumers to afford travel,” he said.

“Therefore, whatever outcomes we experience in tourism and investments – which we expect will remain positive in The Bahamas in the near-term into 2023 – we should appreciate that those positive outcomes would have been greater in the absence of the headwinds that are being experienced.”

While the US economy shrank, albeit by 0.9 percent, the Bahamian economy continued to expand. Estimates in the Fourth Quarter Public Debt Statistical Bulletin released last week showed that nominal gross domestic product (GDP) in The Bahamas grew to $12.6 billion at the end of June 2022, compared to $12.03 billion at the end of March and $11.2 billion at the end of 2021.

“What is noteworthy about what The Bahamas is experiencing now is that there is still a recovery from COVID-19 setback and the spread of that recovery, even with the drag of these forces, is still sufficient that there is a net positive momentum for the economy,” Rolle said.

“But we should understand that growth has been downgraded in terms of the outlook for economies globally and The Bahamas is no exception. So, it doesn’t immediately translate into a contraction for The Bahamas. But it does mean that what we experience by way of progress, that progress would have been more in the absence of the headwinds.”

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. 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

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