The Tribune

Baha Mar’s delayed opening could potentially slash 50 per cent off the Bahamas’ 2015 economic growth forecast, a well-known businessman has warned.

Robert Myers, the former Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, told Tribune Business that this nation’s GDP expansion was now likely to be “well below” 2 per cent.

He suggested that Bahamian economic growth for 2015 would be between 1.2-1.5 per cent, around a full percentage point below the 2.3 per cent expansion forecast by the International Monetary Fund (IMF) in its World Economic Outlook (WEO), published in April.

Given that Bahamian GDP is around $8 billion per annum, one percentage point of economic growth is equivalent to roughly $80 million. If Mr Myers’s estimate range holds true, Baha Mar’s delayed opening will cost the Bahamas between $64-$100 million in economic expansion.

“We’re already half-way through [2015] and don’t have Baha Mar open,” Mr Myers told Tribune Business, suggesting that economic growth would likely be downgraded to “one and something per cent, but well below 2 per cent”.

“I think it will end up between 1.2 per cent and 1.5 per cent,” he added. “That’s a guess, but Baha Mar is going to be a big hit and I don’t know what else is happening.

“You don’t get the feeling the Bahamian economy is booming. Atlantis is doing well, and tourism is definitely on the uptick. A lot of other industries are doing better, but it’s not booming. It’s very hard out there. It’s hard to make a buck.”

The Central Bank of the Bahamas has already moved to downgrade its 2015 economic growth forecast, acknowledging that this will be “somewhat below expectations” for the first nine months of the year due to Baha Mar’s problems.

Many observers will argue that given Baha Mar’s recent travails, the Bahamas was unwise to place ‘all its eggs in one basket’ for generating economic growth and a reduced unemployment rate.

Mr Myers reiterated that previous IMF projections showed the Bahamas needed to achieve an average economic growth rate of 5.5 per cent between 2013-2018, if it was to both halve the existing 15.7 per cent unemployment rate and absorb all school leavers into the workforce.

The Fund’s latest growth forecasts suggest that even if Baha Mar had opened on March 27, this nation will only achieve 50 per cent of the necessary growth rate - at best - between now and 2020.

For Bahamian GDP growth is projected to peak at 2.8 per cent next year, before falling back to a 1.5 per cent average in the years leading up to 2015.

“There should be a lot more incentives for Bahamians to invest and focus on development and growth,” Mr Myers told Tribune Business. “We need to incentivise business development and growth.

“We’ve got to keep business moving, especially with Baha Mar being flat. We’ve got to keep other sectors growing. We’ve got to be encouraging foreign home developers, and encouraging foreigners to invest in second and third homes.

“We’ve got to stimulate other sectors of the economy, maybe by reducing the cost of Business Licences, reducing the cost associated with importing management talent.”

Mr Myers called for next week’s Budget to produce evidence of a reduction in the deficit, and lower recurrent (fixed cost) spending by the Government.

“The only way to pay this deficit off is by 6.5 per cent GDP growth to meet our current employment and debt needs,” he added.