The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods chief executive fears the Bahamas could talk itself into a self-fulfilling economic downturn, warning: “If we keep talking negativity, negativity is what we will get.”

Gavin Watchorn told Tribune Business that while the ‘fear of crime’ was a real and understandable issue in the Bahamas, the continual negative talk on the issue risked “turning the hype into belief”.

Emphasising that he was not seeking to downplay the crime problem, Mr Watchorn said the persistent focus on it threatened to further undermine consumer and business confidence.

“We need a ray of positivity to come down and shine upon us,” the AML Foods chief told this newspaper. “The fear of crime, and while crime is real, I personally feel we’re turning the hype into belief.

“If people are talking that it’s terrible, it becomes terrible. We need more positivity. I have to fundamentally believe there’s more good people than bad people.

“If the talk is continually negative, it has to be impacting everyone - whether it’s children listening to it in the car, employers or employees listening to it. If we keep talking negativity, negativity is what we get.”

Bahamian economic confidence is already extremely fragile, due to the $3.5 billion Baha Mar project’s ‘implosion’; a persistently high unemployment rate; and Value-Added Tax’s (VAT) impact on consumer spending and disposable incomes.

Tribune Business contacts have suggested that many businesses saw top-line sales decreases of 20 per cent or greater in 2015, making it one of their worst years ever.

Mr Watchorn acknowledged that 2016 was “going to be another challenging year” for most Bahamian businesses, with the prevailing negative sentiment threatening to be exacerbated by crime and the uncertainties surrounding National Health Insurance (NHI).

The BISX-listed food retail/franchise group chief added that the Bahamas could also not afford to ignore the many volatile forces impacting the global economy, given this nation’s vulnerability to external shocks.

While the Bahamas will likely benefit from “collapsing oil prices” through lower energy and gasoline costs, it may also feel a negative impact from global stock market volatility and fears of a Chinese economic slowdown.

Mr Watchorn said early-year market jitters could impact the Bahamian tourism industry, given that the high-end visitors that form this nation’s key target demographic are heavily invested in stocks.

He added that stock market losses, and fears of more to come, could also translate into reduced spending from those visitors that still travel to the Bahamas.

“The average person may not feel they are impacted directly, but they are,” Mr Watchorn told Tribune Business.

China’s growth slowdown, too, could have important implications for the Bahamas. Apart from the Christie administration’s increasing reliance on China as a source of foreign direct investment (FDI) dollars, this could also affect the speed with which a Baha Mar resolution is achieved, given the vendor (China Export-Import Bank) and likely buyer origins.

Turning to local forces, Mr Watchorn said unemployment remained “stubbornly high”, while NHI’s impact on both employers and employees was still unknown.

The head of AML Foods, which owns the two Solomon’s and Cost Right retail formats, also questioned whether some Bahamians “are going to be able to bear it” should new or increased taxes be levied to support NHI.

“I think 2016 is going to be another challenging year,” Mr Watchorn told Tribune Business. “Businesses are going to have to work hard to come out the other end, but if they do work hard and make the tough decision that need to be made, they will come through it.

“I think there will be [business] failures, and I hope they are minimised for the good of the economy. We don’t want an increase in unemployment.

“We’ve got such a small economy, that $1 spent in my store has probably been spent previously in 10 other stores. Taking $1 out of the economy impacts not just my store, but 10 other stores.”

Mr Watchorn said he was confident that AML Foods, which also includes the Domino’s Pizza and Carl’s Jnr franchises, would match prior year profits provided there was no economic collapse.

“In AML, we think we’re focused on the right areas such that, barring a catastrophic collapse in the economy, we will be able to produce earnings consistent with the last year or two,” he added.

“We don’t see tremendous growrth in 2016; it’s likely to be more of the same. There’s areas of growth out there, and we’ve got certain areas that we’re looking to for sales growth, but I don’t think we’ll see companies return 10-15 per cent increases in 2016.

“If you get 2-3 per cent increases, that’s good,” Mr Watchorn continued. “I don’t see many people, unless they’re in the security business, having a large increase in sales.”