Coming off of a sluggish second quarter where there was subdued activity in the construction sector, the Central Bank of The Bahamas (CBOB) stated that forward-looking indicators show there could be marked improvement in domestic private sector activity.
The construction sector so far this year has been mainly supported by ongoing foreign investment projects on New Providence and the Family Islands, with little domestic residential activity, according to the central bank’s latest Quarterly Economic Review, released yesterday.
“As an indicator of private domestic activity, total mortgage disbursements for new construction and repairs — as reported by domestic banks, insurance companies and the Bahamas Mortgage Corporation — fell by a further 13.1 percent ($4.1 million) to $27.2 million, after a 15.9 percent decline in the previous year,” the report noted.
“In terms of the components, the dominant residential segment contracted by 9.2 percent to $26.2 million, after 2018’s 11.9 percent reduction. In addition, commercial disbursements decreased by $1.5 million to $1.0 million, extending the $1.1 million falloff in the prior period.”
In the wake of Hurricane Dorian’s catastrophic damage to Grand Bahama and the Abacos, policymakers have said they anticipate a significant uptick in the construction sector as rebuilding efforts begin in the second half of the year.
“Indications are that the sector could record some improvement in the near term, as mortgage commitments for new buildings and repairs — a forward looking indicator — rose by 62 to 157, while the corresponding value firmed by 73.2 percent to $32.1 million, over the prior year,” the CBOB report stated.
“A breakdown of the categories showed that undisbursed approvals for the dominant residential component rose in number by 58 to 153, while the corresponding value more than doubled to $24.6 million from $8.6 million. In addition, four new commercial approvals were disclosed for the quarter, valued at $7.6 million, compared to unchanged levels in the prior year.”