By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Central Bank of the Bahamas has warned that the Bahamian economy is not expanding fast enough to reduce the 13.7 per cent unemployment rate, with tourist arrival growth less than one-third of 2012’s performance.
In its June monthly economic report, the Central Bank warned that flat economic performance was “unlikely to have provided opportunities for employment gains”.
That is not good news for a government or society desperately needing net job creation, and again shows how reliant the Bahamas is on the $2.6 billion Baha Mar project to boost employment figures.
The Central Bank, meanwhile, said June’s flat economic performance reflected “persistent softness in the main tourism sector”.
It added: “A combination of economic weakness in key source markets and increased competition from other destinations constrained growth in tourist arrivals over the first four months of the year to 2.7 per cent, from 8.3 per cent in 2012, for a 2.3 million visitor count.
“The high value-added air segment contracted by 6.8 per cent, contrasting
with the prior year’s 10.2 per cent expansion, while the 5.4 per cent rise in sea traffic extended the year-earlier 7.8 per cent gain.”
The Central Bank said: “By port of entry, visitors to New Providence firmed by 9.6 per cent to 1.3 million, as a 17.1 per cent hike in the dominant sea segment outpaced the 6.8 per cent decline in air arrivals.
“In contrast, the Grand Bahama market fell by 2.4 per cent, on account of a 21 per cent reduction in air visitors, which outweighed the 0.8 per cent rise in the sea component. The 6.8 per cent drop in visitors to the Family Islands was primarily explained by a 7.7 per cent fall-off in the dominant sea traffic, as air arrivals were higher by 1.7 per cent.”
The news was not much better on the hotels front. The Central Bank report said: “Based on a sample of 14 major hotels in New Providence and Paradise Island, room revenues contracted by 6.4 per cent over the period January to May 2013, which was consistent with the fall-off observed in the high value-added stopover segment of the market.
“Broad-based monthly declines led to a 4.6 percentage point contraction in occupancy to 67.8 per cent, which outpaced the 3.1 per cent rise in the average daily room rate (ADR) to $257.58.”
On the fiscal front, the Government’s deficit for the first 10 months of its 2012-2013 fiscal year grew by $126.3 million or 47.7 per cent to hit $391 million.
This resulted from a $66.1 million, or 5.5 per cent, year-over-year revenue contraction to $1.136 billion. Total spending increased by $60.2 million or 4.1 per cent to $1.527 billion.
Recurrent spending on the Government’s fixed costs increased by $40.1 million or (3.3 per cent) to $1.254 billion, due largely to increased transfers to public healthcare entities.
Elsewhere, a modest bright spot came with June’s $53.6 million reduction in the commercial banking sector’s loan arrears to $1.231 billon. Delinquent loans, as a percentage of the total, dropped slightly to 19.9 per cent
The Central Bank report said: “A disaggregation of the average age of arrears showed that delinquencies in the short-term (31 to 90 day) segment fell by $31 million (7.8 per cent) to $368.7 million, with the corresponding loan ratio narrowing by 50 basis points to 6 per cent.
“Similarly, non-performing loans - arrears in excess of 90 days and on which banks have stopped accruing interest - contracted by $22.6 million
(2.6 per cent) to $862.8 million, for a 36 basis point softening in the attendant loan ratio to 14 per cent.”
Looking ahead, the Central Bank warned: “Domestic economic conditions are expected to remain relatively subdued over the latter half of the year, in
line with the seasonal performance of the tourism sector, although ongoing foreign investment-related activity and, to a lesser extent, public sector infrastructural projects, are expected to support gains in construction output.
“The opportunities for employment gains remain constrained, pending a more broadly-based economic recovery, but targeted improvements are poised to be realised in several islands benefiting from new foreign investment activities.”
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