The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas could more than double its average economic growth rate to “well over 5 percent” if it gave residential construction “the attention it deserves”, a leading contractor argued yesterday.

Leonard Sands, the Bahamian Contractors Association (BCA) president, speaking out after the industry was identified as one of the key drivers of 2024’s 3.4 percent gross domestic product (GDP) expansion, warned persons to be careful how they interpret this data as not all contractors were feeling the benefits. Construction output was said to have expanded by $146m, or 19 percent, in 2024.

Asserting that there is “declining work” for smaller contractors in the Bahamian residential housing market, due to inflation, rising construction costs and challenges clients have in obtaining financing, he called on policymakers to break the “stranglehold” that banks have imposed on lending as the process has now become “so arduous and sometimes onerous”.

Mr Sands’ comments came as the Opposition yesterday called on the Bahamas National Statistical Institute to explain what it meant by the $413.8m “statistical discrepancy” that it said seemed to account for much of the 3.4 percent real GDP growth recorded in 2024.

“Obviously, in looking at the growth, it seems to be the majority of the growth is based upon this statistical discrepancy,” Kwasi Thompson, the Opposition’s finance spokesman, told Tribune Business. “We need to understand, and they should be transparent, so everyone understands how they arrived at this amount.”

Nerissa Gibson, the Institute’s acting managing director, did not reply to Tribune Business’ voice mail seeking comment before press time last night. However, the “statistical discrepancy” was equivalent to 3 percent of GDP or most of the growth recorded for 2024.

The 3.4 percent figure was also some 79 percent higher, in percentage terms, than the 1.9 percent GDP growth recorded by the Central Bank in its recent March 2025 economic developments release. And it was also higher than the 3 percent GDP growth that the Institute recorded for 2023, even though the economy is thought to be slowing back to its long-run growth average after the post-COVID reflation.

Other sources, speaking on condition of anonymity, also pointed out that the Institute has significantly revised its GDP output estimates for the four-year period between 2020 and 2023 in this year’s figures compared to what was presented in the 2023 national accounts. For example, GDP for 2023 has risen from $12.831bn to $13.647bn - a jump of more than $800m.

And, while the construction industry’s GDP contribution was said to have increased by $146m or 19 percent year-over-year for 2024, Mr Sands cautioned how the data was interpreted because the figures could be inflated by just a few large projects - especially those financed by foreign direct investment (FDI) - that many Bahamian contractors do not have a chance to work on.

“There’s a lot of activity, but it doesn’t mean all the sector is doing incredibly well,” the BCA president told Tribune Business. “We have to be careful how we break the information down. It’s not the entire sector. The activity is good in a macroeconomic sense, but in a micro sense there is declining contract work available for residential construction because of inflation and the tightness of the bank lending.

“It’s not as good as it seems. While there is activity, it doesn’t mean that activity is affecting everybody.... The data is good but that number is better served in our community if that is 100 percent residential housing. The true impact would be more than quadruple. A dollar turns over ten times in the residential sector because of the hands involved.

“Until we see the robustness that we saw ten years ago in residential housing, not driven by the Government or small patches here and there, we won’t see robust economic growth. If the Ministry of Finance wants to see higher than 1.2 percent growth, put $100m into residential housing. The multiplier effect fully kicks in.”

While “cautiously optimistic” about construction’s future, Mr Sands added: “I don’t understand why we have allowed the commercial banking sector to kind of put a stranglehold on construction financing. I understand they are private companies, but if you look at the market in the US and Canada, where they make construction financing incredibly easy so you’re sparking quick to easy turnaround of construction activity.

“Because the process is so arduous and sometimes onerous, there are a lot of persons who decide to buy rather than build and reduce the activity in the sector. We are the second leading industry in our economy, but we don’t give it the attention it deserves.

“If we did that, the GDP growth would be well over 5 percent. We’re tracking around 1.5-2 percent. Every emerging nation where there is a robust construction sector is at 5 percent. We’re playing around with our economy. If we want the economy and GDP to grow, we need to spend money on and encourage construction. We keep on doing things the same way and expecting different results.”

The Institute, in unveiling the advance GDP growth estimates for 2024, said: “According to the 2024 annual estimates, economic activity in the Bahamas increased by 3.7 percent in nominal terms and by 3.4 percent in real terms when compared to 2023.

“This real growth was evident in a number of industries, led by wholesale and retail trade, motor vehicle repair and the construction industries, which were responsible for the lion’s share. In 2024, the value added created through the production of goods and services in the Bahamian economy was estimated at $15.8bn in nominal prices and $14.1bn in real prices.”

Explaining how the GDP estimates were derived, the Institute added: “The production approach to GDP, which is derived from the gross value added (GVA) by industry, showed an increase in real growth across most industries. The industries indicating the most substantial increases in 2024 were the following.

“Wholesale, retail trade and motor vehicle repairs increased by $206 (15 percent). This increase is mainly connected to the growth in household consumption. Construction increased by $146m (19 percent). This industry increased as capital investment within the country continued to grow as evidenced by a rise in the imports of construction materials.

“Information and communications increased by $97m (21 percent), as implementation and increased use of digital technology expanded in the Bahamian economy. Electricity and gas, water supply and sewerage increased approximately $64m (18 percent) when compared to 2023. This real growth can be mainly attributed to lower fuel costs in 2024.”

The Institute added that the expenditure approach to GDP, which bases its calculation in final consumption, investments, exports and imports, “indicated a real growth in a number of sectors in 2024. Gross fixed capital formation showed an increase in 2024 compared to 2023 of 21 percent.

“This was led by the building and infrastructure sector, with an increase of $341m (16 percent), followed by machinery and transportation equipment, which grew by approximately $291m (38 percent). Household final consumption expenditure experienced real growth in 2024 of almost $252m (3 percent) when compared to 2023.

“Exports of goods and services increased by $287m (6 percent) in 2024 compared to 2023. This sector includes the contribution to the economy by tourists, which includes both stopover and cruise visitors’ spending and represents the majority of this component.”