The Central Bank of The Bahamas (CBOB) expects the nation to maintain its modest growth over the near term, thanks to improvements in the tourism sector, though it does expect growth in inflation rates due to the government’s implementation of the 12 percent value-added tax (VAT) in this most recent budget cycle, the bank’s Monthly Economic and Financial Developments (MEFD) report for November explains.
The MEFD report adds that employment conditions are likely to continue to improve due to several “varied-scale” construction sector projects by foreign investors.
“Against this backdrop, employment conditions are projected to continue to strengthen gradually.” The report points out that the government will have to maintain its efforts to
“improve the deficit and debt indicators over the near term”.
It further notes that the government’s “successful” curbing of expenditure growth and its strengthening of revenue have played a large part.
The MEFD report also explains that in November “crude oil prices fell to their lowest level since October 2017, with costs declining by 22.2 percent to $58.71 per barrel”. That decrease has been seen at the pump after local gas prices bumped over the $5.00 mark for a short period this year.
The government was recently congratulated by the International Monetary Fund for its implementation of fiscal responsibility legislation.
The MEFD report also indicates that bank liquidity remains high as banks continue with their cautious lending stance and consumers continue to deleverage. The MEFD report did reveal, though, that mortgage lending increased to $9.5 million, from $2.2 million last year.
“Although further declines in external reserves are projected over the near term, reserve indicators should remain well above international benchmarks,” the MEFD report states.
“However, downside risks remain prevalent, including the potential impact of a prolonged U.S./China trade war on the global economy and its spillover effects to the domestic market.”