Moody’s states in its latest report that there remains a strong downside potential to the robust return of The Bahamas’ tourism sector in 2021, chiefly due to the resurgence of COVID-19 in the US, the country’s important source market; and its possible resurgence in prime island destinations locally.
Moody’s also predicts that the government’s revenue will be about 16 percent lower in fiscal year 2020/2021 versus 2019/2020.
The international credit rating agency said 2019/2020 revenue had already taken a hit by the fourth quarter of the fiscal year because of COVID-19.
“We expect real GDP to expand by 12 percent in 2021, following an 18 percent contraction in 2020,” Moody’s states in its report.
“Our expectation crucially hinges on the return of tourists to the archipelago in 2021. While that process will begin shortly with major hotels slated to reopen in November, risks are significantly tilted to the downside. New waves of coronavirus infections in the US, The Bahamas’ main source of tourist inflows, could lead to very low tourist arrivals.”
Moody’s explained that if The Bahamas suffers a “protracted recovery in the tourism sector”, it will not bode well for the country’s economic outlook in 2021, despite a record $1.4 billion in borrowing by government.
“The coronavirus shock has had a severe impact on The Bahamas’ government finances by reducing tourism inflows and because of quarantines, domestic economic activity more generally,” Moody’s noted.
“Hotels may close again if infections in prime tourist destinations within the country increase. A continuation of low tourism flows would reintroduce the fiscal and external risks that external borrowing, including the 2032 bond, have so far dispelled.”