By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
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.
Comments
DDK 7 years ago
Does the great IMF know about all the numbers houses on every street corner? HUGE DRAIN ON THE ECONOMY!
John 7 years ago
The United States raised its taxes over the past four years, and even though they collected more revenue the National debt grew under Obama and America still has to continue to borrow money. The same thing has happened here in the Bahamas, where government increased taxes, almost mercilessly in a depressed economy. While this may have generated more revenue for government in the short term, it led to a stagnant and shrinking economy, as many businesses were forced to close or downsize their operations. Now the US president, Trump, is proposing to cut corporate taxes by up to 25% with hopes of stimulating the economy and generating economic growth. Of course any growth or boom in the US economy spills over into the Bahamas mainly by way of tourism. But it is time the Bahamas develop self sustaining industries and inter-island trade where more revenue is kept in the Bahamas and recirculated so as to generate additional funds. It will be very difficult to cut taxes in any substantial way in the immediate term because of the national debt and other financial obligations of the government. so government must find other means t stimulate growth.
concernedcitizen 7 years ago
Actually President Obama followed Keynesian economics ,during a recession increase spending and cut taxes .He even extended some of the Bush tax cuts .When the economy improved and he wanted to raise taxes on the rich the republicans had control of the house and would not go along .The only taxes he raised were on couple making over 450,000 and individuals making more than 400,000 by 3% to help pay for the ACA he also raised taxes by 1 1/2 % on investment income for people making over 250 ,000 a year to pay for the ACA,Obamacare ..The rich in the US are paying the lowest "effective rate " the rate they pay after deductions etc in 40 years
banker 6 years, 12 months ago
Everything you say is true.
milesair 7 years ago
If the U.S. quit giving out so much corporate welfare and tax loopholes for the rich, the U.S. would NOT have a deficit problem. However, that would go against the GOP platform of making the U.S. a nation of the rich, by the rich and for the rich which, under Trump, is exactly what it is in the process of becoming! Trump is a disaster in the making and watch out for WW3 which will make the military industrial complex even wealthier than it is. Who cares about how many people will die. Certainly not Trump, an egotistical egomaniac if ever there was one!
John 7 years ago
Many Bahamians fear that the Bahamian dollar will not devalue but the fact is the US dollar is in more danger of crashing than the Bahamian dollar. And, of course, since our dollar is tagged to the US dollar it will also fall. Some say we'll all the US has to do is print more money to pay its debts. The only country in the world that can do that. But it is not that simple. The Federal Reserve Bank that prints US money is not owned by the American government. It is owned by a group of private bankers. So when the Fed prints more money it is actually making a loan to the United States. This loan has an interest and has to be paid back. So when you have US currency in your pocket it is not real money, but it is money issued against a debt. So while you can use it to purchase goods and services, the currency itself has no value. Likewise for the Bahamian dollar. It is issued against debt. It is really a promissory note. And when the government stands to default on its debt the dollar will devalue or can even worthless.
Well_mudda_take_sic 7 years ago
At last you've acquainted yourself with some Zeitgeist and Chomsky material, but that's only the very tip of iceberg when it comes to understanding what is the true aim of Globalism and the New World Order. Good luck in your desperately needed additional studies!
John 6 years, 12 months ago
So you are calling me ignorant? I know more than you could ever dream I know. And my bible tells me that this one world system they are trying to create will never come to pass. It is like trying to mix clay with iron. Not only has the different trade unions and economic partnerships formed on this side of the globe fallen apart or became inactive or ineffective, but Britain has already exited The European Union and France would have have gone next, depending on the outcome of their elections. Churches are as far apart as the east is from the West. The common underlying factor to this one world system is that must be voluntarily. But that does not stop them from killing you if you refuse to join or if you do not meet their criteria.
Well_mudda_take_sic 6 years, 12 months ago
Apologies. Did not mean to sound condescending. It's painfully obvious though that the so called New World Order is very much in favour of Minnis becoming our next PM. And if that happens.....oh well, let's just say no Bahamian will be spared the horrible consequences to follow. Relative to Minnis, everyone is a saint no matter how bad they may in fact be.
OldFort2012 6 years, 12 months ago
The Fed is "owned" by private bankers? Stop believing every conspiracy theory out there and Google it instead. Try: https://en.wikipedia.org/wiki/Federal...">https://en.wikipedia.org/wiki/Federal... or even: https://www.federalreserve.gov/faqs/a...">https://www.federalreserve.gov/faqs/a...
sheeprunner12 7 years ago
While India has 7% GDP growth .......... even though 400 million Indians do not even have electricity ............. What excuse(s) does our government have for this lousy performance since 2008????
John 6 years, 12 months ago
Hint: some trees that grow under taller trees do not get enough sunshine of their own. But notice what is happening now in India now where the government is shutting down all the slaughter houses. They claim they are slaughtering cows, that are sacred in India. This is not only causing the price of scarcely available meats to skyrocket, but many restaurants and meat shops had to close because there is no meat to sell. Is there a coincidence that the tried to do something similar in Brazil, where they claim the beef and chicken was contaminated. almost sending the Brazilian meat industry into a tail spin.
John 7 years ago
People like to say "the rich get richer and the poor get poorer." But many times the poor don't realize they are contributing to the rich getting richer and they themselves getting poorer. Take for example over the past few years The Bahamas, the Caribbean and all major parts of the world were flooded with so called 'cash for gold 'stores. These operations just popped up overnight night and they hoarded every Gramme of gold and every piece of fine jewelry they could place their paws on. People started robbing and breaking into homes in search of gold to go trade off and guess what? They were getting pennies on the dollar for these valuables stolen or not. The stores operated in such a way that even if culprits of robbery or home invasions were apprehended by the police by the time the police got to the store they were told that the items were already melted down or 'shipped out.' This is commonly called 'shallow mining ' where these people would come into depressed communities and buy up gold for a fraction of its value. Then they would polish and resell the really valuable items and resell the gold sometimes at 100 times what they paid for it. And because they make gold so scarce they drive up the price even more.
SP 6 years, 12 months ago
...................“We have to have methodical plans to bring the economy back,”................
HA, since when have pirates had "methodical plans" for anything other than stealing? It will NEVER happen as long as the PLP and FNM grouping of conspirators are in power!!
DOOMED is the best forecast one can be sure about!
John 6 years, 12 months ago
Well since 1913 the US used war to bring their economy back. Not only the US but medieval countries too. In medieval times when times were tough countries would send their men to raid other cities and gather the loot and bring back. Those who were killed and did not return did not have to be fed and those who return had to repair the damage and prepare for another war. In the case of the US, while wartime would help boost their economy and put everyone to work, it also increased the country's debt. And not only did war increase the debt, but the US had to spend more and more of its budget on defense and so its debt continues to spiral. And today the US also pays countries to get rid of weapons of mass destruction or pay them not to produce them. This has become very expensive. And many war liking countries like North Korea, or countries like China, Japan, Russia, Israel France who feel the need to defend their countries will continue to build their arsenals and their armed forces. Then now there is the threats of terrorism, not only against the US, but all around the world. This has become a very expensive item Iin Americas budget but a major priority as well.
PastorTroy 6 years, 12 months ago
@John: "But it is time the Bahamas develop self sustaining industries and inter-island trade where more revenue is kept in the Bahamas and recirculated so as to generate additional funds." QUESTION: Can a LEGAL state-of-the-art controlled and regulated Medical & Recreational Cannabis industry accommodate this? Where out island farmers only are given license to grow and harvest, and the bulk of retail license are given to islands like Nassau, Freeport, Abaco etc?
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