By NEIL HARTNELL
Tribune Business Editor
The Bahamas must reverse the downward GDP growth trajectory forecast yesterday by the IMF, a governance reformer warned yesterday, arguing: “We’re still not where we need to be.”
Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that the International Monetary Fund’s (IMF) world economic outlook represented “a shot across the bows” for The Bahamas even though it showed this nation’s economy holding its own amid fears of a world slowdown.
The fund is still holding to previous predictions that the Bahamian economy will expand by 2.1 percent in 2019 despite fears of global faltering due to the uncertainty surrounding the US trade battles with China, and now the European Union (EU), and concerns over the UK’s political quagmire in attempting to secure its exit - or Brexit - from the European Union (EU).
However, in what amounts to a “glass half full” forecast for The Bahamas, the IMF projects that this nation’s economic growth rate will taper off to 1.6 percent in 2020 and hold steady at this level for the first part of the upcoming decade. It is forecasting 1.5 percent GDP growth for this nation come 2024.
The fund’s predictions imply that, much like the impact of the Trump administration’s tax cuts stimulus, the “bounce” from Baha Mar’s initial opening is gradually wearing off despite the continued “double digit” increases it continues to help drive in tourist arrivals and key hotel performance indicators.
While agreeing that the IMF’s decision to maintain 2019 GDP growth projections at 2.1 percent was positive for The Bahamas, Mr Myers said this remained well short of “the magic number” previously cited by the Fund.
The Washington DC-based organisation had previously suggested that The Bahamas needed to achieve consistent annual GDP growth of 5.5 percent to cut existing unemployment by half and find jobs for all new school leavers, yet its medium to longer-term forecasts push this nation further away from this goal.
“I think that’s a concern,” the ORG principal told Tribune Business. “We should really be targeting, and I’d be hoping we hit, 2.5 percent this year for a positive trajectory and, assuming no global recession in 2020, that we see 3 percent next year.
“They [the Government] need to be out there doing their jobs, and that means hitting 2.5 percent this year and 3 percent next year, whatever they’ve got to do to make that happen, and that includes education.
“We have to bring people along with us, and education is a disaster at the current level. It’s just not adequate for the modern workforce, and they’re boasting that they want to become an IT hub,” Mr Myers continued. “We don’t have the people to do it. There’s a huge disconnect there. I can’t get someone to fix my car, let along be an IT hub.
“There has got to be more focus on how we build GDP. I’m glad they’re [the IMF] feeling 2020 will be stable, but it’s still a shot across the bows. It’s still not where we need it. We need it to be moving up, not sideways or back.”
To reverse the slowdown in GDP growth, Mr Myers said The Bahamas needed to “fix some of the core problems” that turned off Bahamian and foreign investors and drove away scarce investment capital.
Arguing that The Bahamas needs “to make it easier for them to invest” with better infrastructure, he added: “We have an under-educated workforce, our cost of business is too high and the ease of business too low.
“Anything we can do to improve efficiency in government is a priority. We’ve got to try and figure out how to right-size the Government. The biggest albatross around our necks is the Government. It’s too big for this economy, and if we don’t right-size it it will keep the cost of business too high.”
The Minnis administration sought to advance its ambitions to improve the ease of doing business and government efficiency on Monday this week with the formal signing of a $30m loan agreement with the Inter-American Development Bank (IDB) to digitise key government services and eliminate manual processes by making them accessible online.
Mr Myers acknowledged that The Bahamas was “half-way there” at current GDP growth levels, with anticipated investment projects in Nassau, Freeport, Abaco and Eleuthera in the pipeline.
Yet the country remained some way short of the “full employment, where everyone qualified for a job will have a job”, that would occur at a 5.5 percent GDP growth rate. “That’s the magic number to deal with unemployment and debt,” the ORG principal told Tribune Business.
“GDP growth needs to be at 5.5 percent. Anything under that and we’re labouring a bit. It just says we’ve got more work to do. We’ve got to get the ease and cost of doing business competitive and then we will see consumer, business and investor confidence increase.
“There is so much inefficiency and bureaucracy in government that people get frustrated. The big investor is just not going to put up with that.”