By NEIL HARTNELL
Tribune Business Editor
The Bahamas has just suffered its fourth consecutive year with no economic growth, prompting the Chamber of Commerce’s chairman to call for “methodical plans to bring the economy back”.
Speaking after the International Monetary Fund (IMF) projected that the Bahamas endured zero GDP growth in 2016, Gowon Bowe told Tribune Business that “meaningful, sustained dents in unemployment” were impossible with such a “lethargic” economic performance.
Data contained in the IMF’s recently-published World Economic Outlook shows that economic growth in the Bahamas flat-lined last year, standing at 0 per cent.
While this represented an ‘improvement’ upon the prior two years of recession, the Bahamian economy having contracted by 0.5 per cent and 1.7 per cent in 2014 and 2015, respectively, the 2016 performance was still below the Government’s own 0.5 per cent growth projection.
And, given that IMF data shows the Bahamas also enjoyed 0 per cent GDP growth in 2013, this nation has gone four years - most of the Christie administration’s term in office - without positive economic growth.
The IMF paper provided no explanation for the Bahamas’s failure to meet initial 2016 GDP growth projections, although this is likely to have been caused by Hurricane Matthew’s initial impact.
The immediate outlook for the Bahamas, though, is brighter, with the IMF forecasting GDP growth of 1.4 per cent and 2.2 per cent for this year and 2018, respectively. The former is higher than the 1 per cent estimated by the Government in its May Budget.
Much of the return to growth is likely connected to Baha Mar’s opening, with the property’s full impact set to be felt next year when it becomes fully operational, in line with the IMF’s forecast.
However, the Fund is also predicting that Bahamian GDP growth rates will slacken off following Baha Mar’s first year unless new sources of impetus are found, with this nation’s economy forecast to expand by just 1.3 per cent in 2022.
Even at the Baha Mar post-opening ‘peak’, such growth rates remain woefully short of the 5.5 per cent that the Fund said was needed to both absorb all new entrants into the Bahamian workforce and cut existing jobless rates in half.
Mr Bowe, speaking after Baha Mar’s ‘soft opening’ on Friday, said that while the $4.2 billion property’s economic impact should be significant, it was “not the be all and end all” for the Bahamas in terms of generating sufficient GDP growth.
“We have to have methodical plans to bring the economy back,” the Chamber chairman told Tribune Business, suggesting that the Bahamas needed to focus on improvements to the ‘ease of doing business’ and further exchange control liberalisation.
“The National Development Plan is going to be critical for any administration to say that this is the way we’re going to climb out of this,” he added.
“We need to look at long-term plans and not get concerned by bumps in the road. If we move along without concrete plans, every time there’s a negative element, it seems more grandiose than it might be.”
Mr Bowe said the Bahamas also needed to develop its own reliable statistical mechanisms rather than rely on outside projections, thus giving this nation a statistical basis from which to dispute such findings.
However, he acknowledged that the IMF’s growth projections fell well short of what the Bahamas required to sustain economic and social stability.
“We had identified, based on empirical evidence, that to make meaningful, sustained dents in unemployment we had to be growing at 5 per cent or more,” Mr Bowe told Tribune Business.
“It’s now probably nearer 7 per cent. As long as we stay around lethargic growth levels of 1-2 per cent, that will be a challenge for any administration to be grappling with.”
Mr Bowe’s concerns were echoed by Organisation for Responsible Governance (ORG) principal, Robert Myers, who said the zero GDP growth for 2016 was “not surprising” given the continued wait for Baha Mar’s opening.
“If Baha Mar comes online it could add 1 per cent or more,” Mr Myers told Tribune Business, “and hopefully we get some growth elsewhere.
“But that’s not enough to deal with unemployment and the national debt. It’s not enough,” he added of the Bahamas’ GDP growth projections. “We need to be at a minimum 5.5 per cent to deal with unemployment, the fiscal deficit and the debt.
“Another several thousand kids will be coming out of high school in the summer looking for work, who are under-qualified and going to be hitting the streets.
“I don’t think you’re going to see any consumer confidence or business confidence unless we start to see the Government acting on a Freedom of Information Act and Fiscal Responsibility Act, and starting to do something about education,” Mr Myers continued.
“The next government has got to take fiscal responsibility, governance and accountability seriously, and to improve workforce development and productivity.”
The official unemployment rate has remained stubbornly in double digits ever since the 2008-2009 recession, although the latest statistics showed it had dropped to 11.6 per cent.