Governor of The Central Bank of The Bahamas (CBOB) John Rolle said yesterday that the bank sees The Bahamas’ economy improving in 2020, though growth at previously projected levels is not expected as a result of the effects of Hurricane Dorian.
Rolle’s optimism was due to some quicker-than-expected improvements on some of the Abaco Cays that were affected by Hurricane Dorian; the movement of tourist visits to islands unaffected by Hurricane Dorian, with the help of the vacation rental sector; and the pass-through effect of construction on the hurricane-affected islands of Abaco and Grand Bahama. He added that the foreign investment portion of the economy also remains robust.
“We see the economy improving,” Rolle said.
“It’s just that there are two sets of forces at work. Fundamentally, wherever the storm damages were avoided, those parts of our economy are still strong and moving ahead. It is only a question as to whether they’re going to move fast enough to overshadow that missing piece, which is Abaco, and to some extent Grand Bahama.
“The underlying forces that are pushing the economy ahead are still present and fortunately the vacation rental market in particular. You have also seen some shift to parts of The Bahamas not impacted by the storm.”
Rolle said public debt in terms of the country’s gross domestic product (GDP) is expected to increase as a result of government borrowing, but he did not peg this reality as a negative consequence of the storm.
“It’s just how those resources are used,” he said.
“It could put the economy in a stronger position longer term, so that the government could continue to focus on getting the debt lower. So, we shouldn’t be too concerned or alarmist about the government having to borrow in a situation like this; because if the government is unable to borrow because it doesn’t have the capacity to borrow, your economy would have a more negative outcome overall.
“So, what we want to focus on is using the opportunity to borrow to provide support for the recovery and after you have recovered, re-intensify your focus on reducing your debt. You’re always reducing debt so that if you need to borrow you can borrow.”
While Rolle did not want to confirm what the country’s growth number could be, he said it is reasonable to expect that growth will be zero or negative, or in the range of a low percentage.
When asked if the coronavirus could affect the economic recovery of The Bahamas, Rolle said it was unlikely.
“As a tourism economy, we always monitor and see these sorts of global health outbreaks as areas of concern and points of vulnerability in the tourism sector,” he said. “But we believe that at this point there will be a satisfactory global response.”