The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The risk that The Bahamas will suffer a slowdown in tourist arrivals and spending is increasing with every day that the conflict between the US, Israel and Iran continues, an academic warned yesterday.

Rupert Pinder, assistant professor of economics at the University of The Bahamas (UoB), told Tribune Business that - apart from the likely increase in pump gasoline prices and energy costs - the Middle East war could also threaten the performance and well-being of this nation’s largest industry if it becomes a protracted conflict with no end in sight.

Even as Donald Trump, the US president, sought to reassure that many of his military objectives have been completed, thereby easing tension on Wall Street and global stock markets as well as crude oil price pressures, Mr Pinder warned: “There’s reason to be cautious about a number of things.

“If there is a prolonged impact, you can rest assured there will be an impact on tourism spending where you have these uncertainties and people perceive their jobs in the long-run may be threatened. People will be more cautious on spending, particularly discretionary spending, and tourism is largely discretionary spending.”

Mr Pinder, noting that Middle Eastern wars have previously plunged the world into economic downturns and recessions, particularly the so-called ‘oil price shock’ of the 1970s after Arab countries cut-off oil supplies to the west in the aftermath of conflict with Israel, added that “it’s not just the pockets but the willingness of Americans to travel potentially from a security standpoint”.

Besides an increase in transportation costs due to surging oil prices, which could be passed on to Bahamian families via increased imports and goods costs that threaten to trigger a new ‘cost of living’ crisis, access costs for tourists to The Bahamas may also increase as a result of higher aviation fuel costs.

Kerry Fountain, the Bahama Out Island Promotion Board’s executive director, yesterday said the potential impact of higher fuel costs did not come up in talks with major airlines at the Routes Americas conference last week. However, noting that the situation is fast-moving, he revealed that gas prices in Florida - where he is based - have risen by close to $1 - from $2.59 to $2.69 to the present $3.39 to $3.59 - in less than a week.

He added, though, that The Bahamas needed to “pull out the trump card” and market both its proximity and relative security to a US customer base that is typically responsible for 90 percent of this nation’s tourist arrivals in a bid to counteract the negative fall-out from the Iran war.

Both Raymond Jones and Vasco Bastian, president and vice-president of the Bahamas Petroleum Retailers Association (BPRA) respectively, yesterday warned Bahamians to brace for an increase or “adjustment” in gas prices at the pump in the near future due to the jump in global prices.

Mr Bastian sought to reassure that “there’s nothing for motorists to fear” and added: “I don’t think the increase will be so gigantic as to cause major disruption in daily travel.” However, neither he nor Mr Jones were able to predict how high gas prices may go, as this depends on when the major oil companies do their buying, how much existing inventory they have yet to use up, and the pricing structure - whether the price is based on time of purchase or delivery.

Oil markets have been disrupted by the virtual closure of the Strait of Hormuz, the 24-mile wide waterway that provides access to the Persian Gulf and around 25 percent of the world’s crude supply, due to the war. Oil prices dropped back to $92 a barrel, after reaching as high as $120 earlier in the day, after Mr Trump’s suggestion that military operations were ahead of schedule and that he would seek to increase global supply by easing sanctions on Russia.

Meanwhile, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman urged local businesses to prepare for global economic shifts while positioning themselves to seize new trade opportunities emerging from geopolitical uncertainty.

Don Williams said companies must remain vigilant as international developments increasingly influence local operating costs and supply chains, warning that businesses should plan not only for disruptions but also potential opportunities.

“We encourage businesses to be prepared’; not just for changes that may affect them, such as increases in fuel costs, labour, supplies and logistics, but also to be ready to take advantage of opportunities,” Mr Williams said.

“For example, because of the global unrest we’re seeing now, there may be opportunities to supply another business or even another country depending on your product or service. At the Chamber, we’re encouraging businesses to stay prepared, remain vigilant and understand how global trends will affect their operations.”

Mr Williams added that the Chamber has been working to expose Bahamian entrepreneurs to new international markets through trade missions and partnerships aimed at reducing the country’s heavy reliance on the US.

“Over the past few years we’ve carried out a tremendous number of trade missions,” he said. “We want the business community - any entrepreneur - to understand that there are opportunities to trade not just directly with the US because of our proximity, but also with markets such as China, India and some of our Caribbean partners like the Dominican Republic and Cuba. We provide an avenue for businesses to explore some of these new trade routes and opportunities.”

Mr Williams said the Chamber has in recent years sought to expand opportunities for Bahamian companies to participate in regional and international commerce, particularly as global supply chains continue to shift following COVID-era disruptions and ongoing geopolitical tensions.

He added that businesses which remain flexible and informed about global trends will be better positioned to adapt to changing conditions while identifying new avenues for growth.