Although The Bahamas’ economy will still be in recovery mode in 2022, Central Bank Governor John Rolle said it could grow beyond the eight percent projected.
Fueling that growth, Rolle said, is an expected uptick in spending by Bahamians, which he expects will draw down from the $2.4 billion in foreign reserves at the end of 2021, the highest year-end reserves recorded.
“In terms of where we are now, in 2021, we ended the year with about $2.4 billion of foreign reserves, which is the highest level that we’ve ever closed out a calendar year. This year, we expect and we hope to see some of those reserves used up as Bahamians spend more, as investments increase and as the ability for persons to move about and undertake expenditure is increased relative to where we are coming from during the pandemic,” he said during the 31st Bahamas Business Outlook.
“And that really translates into an expression as to the Central Bank’s comfort that we are in a position to absorb increased spending from the population. Some of that spending we will expect to see happening in the construction sector. Foreign investment is driving some of that but also there is ongoing rebuilding happening from Hurricane Dorian.”
Rolle added that he fully expects to see government finances right-sided this year, contributing to a further strengthening of the economy.
The Ministry of Finance has said it is currently $160 million ahead of revenue projections for this period and is relying on the recent value-added tax reduction to spur more consumer spending and add to revenue intake.
“We’re also expecting – and this is important for the populace as a whole – to see the government’s financial position improve because the health of the government’s balance sheet impacts us all and that determines how the economy improves as a whole and how the government is able to find the resources to move further down the line, in terms of supplying and meeting the needs of the country,” Rolle said yesterday.
The Central Bank governor said that, by and large, the economy has turned a corner, however, he cautioned that downside risks still persist.
“For The Bahamas, when we look at 2022, our economy is still going to be very much in a recovery mode. In that recovery mode, we’re benefiting most from the restoration of activities in the tourism sector and continued push from foreign investor activities. Given where we are today, and the ground that we were still recouping last year, it’s expected that, in 2022, The Bahamas will grow anywhere in the region of eight percent or slightly above that,” he said.
“That really reflects still trying to get back to where we were in 2019 and we’re expected to conclude this recovery to 2019 sometime in 2023. Globally, given that we are dependent on tourism, there is some expectation that the tourism industry as a whole is going to reach where it needs to be by 2024. But there is reason to expect that The Bahamas will get back to full capacity before that point.”
Rolle added, “We have to be mindful though that there are downside risks we have to pay attention to. The COVID-19 situation and how we manage it impacts how smooth the recovery in tourism will be. Some of that is international and we have no control over it but we have to take control as much as possible of those factors in our domestic reach – vaccinations as well as other safety measures that we continue to focus on to reduce the incidences of disruption.”