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Bahamas’ GDP per person lower than pre-recession era

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ real GDP per capita is lower now than it was 11 years ago before the start of the global recession, the Inter-American Development Bank (IDB) has revealed.

The IDB, in its latest Caribbean quarterly bulletin, provided further evidence of how negative economic growth over the past decade has resulted in reduced living standards and quality of life for many Bahamians.

“The average growth rate during the past decade of The Bahamas (-1 percent), Barbados (-0.7 percent), and Jamaica (-0.5 percent) was negative and close to zero,” the multilateral lender disclosed. “As a result, real GDP per capita of these countries remains below 2007 levels.”

The IDB’s revelations further underscore the deterioration caused by the failure, spanning successive FNM and PLP administrations, to revive the Bahamian economy following the 2008-2009 recession and achieve higher levels of job-creating gross domestic product (GDP) growth.

The Bahamas was the worst performer of the three Caribbean nations mentioned and, despite the IDB sounding an optimistic note about this nation’s growth prospects for 2018 and 2019, it suggests this nation will still not fully recover the past decade’s lost ground over the next five years.

For the same report, drawing on recent International Monetary Fund (IMF) data, forecasts that The Bahamas will have one of the lowest annual improvements in real GDP per capita growth between 2018 to 2023 at around 0.5 percent. Only Ecuador and Bolivia are expected to fare worse.

The IDB report illustrates the extent of the task facing the Minnis administration to achieve higher economic growth at a time when it has imposed fiscal austerity measures in a bid to solve The Bahamas’ chronic debt and deficit problems.

Still, the IDB’s report said: “The performance of tourism-dependent Caribbean countries continues to improve. The Bahamas is recovering from the effects of hurricanes in 2016 and 2017 that led to higher public spending and interruptions in the flow of revenue.

“For 2018, expectations are for a recovery of growth (2.3 percent) and a substantial improvement in fiscal efforts (a primary fiscal balance of 0.1 percent of GDP compared to -3.4 percent in 2017) that will lead to a stabilisation of debt as a percentage of GDP below 55 percent.”

The IDB report said that while the economy “appears to now be on a stable growth path”, much depends on “significant capital projects” and foreign direct investment (FDI) inflows if it is to achieve the Government’s targets in the medium term.

“Sluggish growth in private sector credit is likely to persist even as the country moves toward establishing a credit bureau,” it added. “The increased usage of external debt proceeds coupled with a reduction in private sector credit impacted domestic credit, which contracted by roughly 4 percent, while private sector credit fell by 0.7 percent as of the end of 2017.

“For the first six months of 2018, domestic credit marginally improved to 0.9 percent, as private sector credit declined. Although there is liquidity, lending has been risk-averse because of high non-performing loan (NPL) levels, which were concerning at 8.9 percent as of June 2018.”

Turning to the external economy, the IDB added: “It is estimated that the current account deficit will be 12.7 percent of GDP at the end of 2018, compared to 15.7 percent a year earlier. Imports returned to trend levels during the year following a surge in the prior period to facilitate hurricane rebuilding activities and the completion of a major tourism investment project [Baha Mar].

“The deficit is projected to gradually decline in the medium term to 6.2 percent by 2020.The current account deficit has mainly been financed by private inflows. The country has been increasing its reliance on private capital inflows (9.2 percent in 2018), while FDI inflows currently stand at 2.4 percent.

“Private capital inflows contributed on average 11.6 percent of GDP, and direct investment contributed 1.7 percent of GDP during the 2013–2018 period. However, there is an expectation of a rebound in the contribution of FDI, with the medium-term forecast improving. Equity investment has gradually started to strengthen and is expected to reach approximately 2 percent of GDP at the end of 2018, then increase roughly to 3.3 percent of GDP in 2019.”

The IDB report added that higher interest payments on the Government’s debt were a growing concern, saying: “A decomposition of The Bahamas’ public debt suggests that interest payments are the main driver for fiscal year 2018.

“Higher interest payments also made important contributions to the change in debt, and its impact is expected to continue on par with growing payment obligations. Interest payments grew from 1.98 percent in fiscal year 2015 to 2.26 percent in fiscal year 2018.”

Comments

concerned799 4 years ago

It would appear that low and behold we can not as a region grow with cruise ships comprising an ever growing percentage of our main industry? Now that's a shocker.

If your visitors counts are UP and you are making LESS money per person then something is well WRONG folks.

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tell_it_like_it_is 4 years ago

"For the same report, drawing on recent International Monetary Fund (IMF) data, forecasts that The Bahamas will have one of the lowest annual improvements in real GDP per capita growth between 2018 to 2023 at around 0.5 percent. Only Ecuador and Bolivia are expected to fare worse."

Sad to say this report isn't very surprising. We see the proof all around us despite how politicians on either side try to spin things. Sad indeed.

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DDK 4 years ago

If we keep these 'web shops' and slack, corrupt governments going we will drop even further! Sadly, only see a faint glimmer of light at the end of this tunnel! As for FDI, aren't the foreign monetary sharks doing all they can to ensure this is almost non-existent? I think we are in for a very rough ride.........

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Well_mudda_take_sic 4 years ago

And who but the IMF, IDB, OECD, FATF and so on should know that our country and its people have been swimming backwards for a decade or more? It's these very same international organizations that have charted the futile course that our successive elected government officials have so gleefully put us on. Minnis, Turnquest, Bethel, D'Aguilar and others like them worship these international organizations whose singular mission is to create the conditions necessary in our country that will enable their foreign constituents to buy our most valuable national assets for peanuts on the dollar, leaving Bahamians to serve as slave labour and eat mud pies to survive. LMAO

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SP 4 years ago

We can thank Hubert Alexander Ingraham, and Perry Gladstone Christie, for a Yeomans job of phucking up our country and decimating Bahamians!

Alternatively, Haitians, Asians, Latinos, Jamaicans, Africans and many others are thriving in the Bahamas. Too bad for dumb and dumber that these expats cannot vote.

I don't want to hear another peep from Hubert, Perry, their mp's or cabinet members about A-N-Y-G-O-D-D-A-M-T-H-I-N-G for the rest of their pathetic lives!

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banker 4 years ago

Not really. The die was cast with Lyndon Oscar Swindling. There are still a whole bunch of ignorant sheeple who are still unenlightened enough to not recognise this. Once we prosecute the PLP as a criminal organisation and the populace is fine with that, then we will excise the cancer from The Bahamas.

The trouble is that too many Bahamians from all walks of life benefit from the corruption, backwardness and slackness that is prevalent in most of the population.

The only people that I see thriving are the web shop bosses and politicians.

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bogart 4 years ago

HERE WE GO AGAIN.......SERIES OF DENIALS....EXCUSES....EXCUSES.....ONE SIDE BLAMING OTHER SIDE ....BLAME THE PEOPLE.....BLAME DA CRIME....BLAME DA EDUCATION....BLAME DA ILLEGALS.......SO FORTH ...REPEATED ALTERNATING TERMS EVERY FIVE YEARS........EACH GOVT HAVING MAJORITY SEATS TO MAKE .....CHANGES........an we going backwards...the pore getting porer...over 50% struggling...4,000 mortgagers losing homes...more people depending on charities for food....double digit employment...even govt propping up Freeport....most regressive taxation on backs of the most weakest citizens....

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Well_mudda_take_sic 4 years ago

You just know that we're a much poorer country when even the cartel of Canadian banks can't make a decent buck from their Bahamas operations and want out. As one senior Canadian banker recent put it: "If Bahamians want the numbers bosses to take over banking in their country, so be it - but we certainly won't be sticking around." LMAO

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bogart 4 years ago

TRUE.....number of reasons....CATCHMENT AREAS.....new streams.....less disposable income...poverty...unemployment..some 600 million going through numbers houses....., no need for bank..PLUS ...UNFAIR COMPETITION.....banks face when govt.....gets involved and uses taxpayers money to prop up .......working against majority of share owning investors share owners in majority of banks...REGULATOR...BOD...staffed with political appointees.....saying nothing....on unfair competition....amazing...ridiculous.....wanting and depending on FDI.....an then govt....gets into the act competing with them with pore taxpaying people taxes.....no investigations.....quiet appeasment..on many practices needing investigations....no protections for the pore Bahamians ....instead erryting done for banks try to keeps erryting kopasettic....

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Damifiknow 4 years ago

Need to raise vat again and finish it off !

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