By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Central Bank of the Bahamas yesterday gave a mixed short-term outlook for the Bahamian economy post-Hurricane Matthew, predicting that employment may “slightly improve” even though the tourism industry will be “below trend” in the Christmas run-up.
The regulator, in an analysis prepared by its research department, suggested that the Category Four storm’s impact on the 12.7 per cent unemployment rate depends on whether construction industry activity offsets reduced tourism jobs.
Noting that the Department of Labour is currently preparing its November Labour Force survey, the Central Bank said: “Employment should be stable to slightly improved due to construction labour demand.
“Results will be influenced by the large increase in demand for construction workers for building repair activities. Temporary under-employment will, however, persist in the resort sector in Grand Bahama.”
The Central Bank also warned that “skills shortages could surface” in the construction industry, “given the significant volume of repair activities alongside ongoing investment projects”.
Hotel industry unemployment may be short-lived, given that Grand Bahama’s key resorts, Memories and the Grand Lucayan, are both projected to re-open before Christmas - in time for the key winter season.
However, the Sunwing airline, which is affiliated with Memories and is responsible for bringing most stopover visitors to Grand Bahama, has temporarily suspended flights until repairs are completed - prompting Prime Minister Perry Christie to make an impassioned plea to the company for the resumption of services as soon as possible.
The Central Bank report was also produced before the One & Only Ocean Club announced it would only re-open in February 2017, creating uncertainty about the immediate future of its 350 staff.
Still, the Central Bank predicted: “Overall impact on the tourism sector will be muted and shortlived, due to the timing outside of the peak winter season, and limited disruptions with the exception of Grand Bahama.”
It acknowledged, though, that tourism activity “remained relatively soft” during 2016, with Nassau Airport Development Company (NAD) data showing one million visitor departures from the capital in the nine months to end-September 2016 - a 2.3 per cent year-over-year increase.
However, the Central Bank said there was a 25 per cent decline in commercial banks’ net foreign currency purchases to $176.5 million over the same time period. Given that this indicator is influenced by tourism inflows, it suggests business levels have fallen for the Bahamas’ ‘number one’ industry.
“In light of these developments, and the closure of all airports within the country during the hurricane, arrivals are expected to be modestly below trend for the fourth quarter,” the Central Bank said.
“Given the reduced room inventory, tourism receipts are also likely to fall below trend during this period.”
Matthew has also dealt a blow to the Government’s fiscal position, with the unexpected $150 million borrowing to cover restoration costs - estimated to total $600 million - set to both increase the $6.778 billion national debt and widen the 2016-2017 beyond the initial $100 million projection.
Revenue inflows have also been disrupted by the interruption to business activity in Matthew’s aftermath, plus the ‘tax breaks’ granted by the Government’s exigency Order to assist the rebuilding programme.
“Expectations are that hurricane-related outlays to facilitate the repair of Government infrastructure and higher social assistance spending, alongside some abatement in near-term revenue potential, will place additional pressure on the fiscal position,” the Central Bank said.
“The restart of the Baha Mar project, along with extensive domestic rebuilding and repair work, should provide strong construction stimulus, although potential skills shortages and projected upward pressures on prices for building materials could pose significant risks to the sector. Downside factors could impact employment over the near-term, due to temporary business closures.”
The Central Bank said Matthew damages will likely “exceed” $600 million, with some $400 million of this covered by private insurance. This leaves one-third, or some $200 million, as uninsured losses and damage to public buildings and infrastructure, not to mention the economic losses.
Referring to information from the Bahamas Insurance Association (BIA), the Central Bank added that by end-2016 some 50 per cent of insured losses, amounting to $200 million, will be covered by foreign currency reinsurance inflows.
The Central Bank also warned Bahamians to “expect some modest cost pressures” as a result of Hurricane Matthew, with building materials prices set to rise as a result of demand both in the Bahamas and the US.
There will also be “pressures in the local construction sector due to queuing of jobs and potential skills shortages”, while the continuing increase in oil prices could further stoke inflation.
Comments
Well_mudda_take_sic 7 years, 4 months ago
Does John Rolle really think over burdened honest hard working Bahamian taxpayers appreciate knowing that the government (with the help of the Central Bank) is borrowing significant sums of money the country cannot afford to repay in order to, among other things, keep the unemployment rate down? Is he for real?!!!!!
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