The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister yesterday asserted that the Government is “clear eyed” about the challenges facing the Bahamian economy as he hailed this nation’s post-COVID rebound  as “mould-breaking and outstanding”.

Michael Halkitis, minister of finance, in delivering the 2026-2027 Budget in the House of Assembly said The Bahamas has enjoyed a five-year growth run above its long-assumed economic ceiling and has consistently outperformed expectations since 2021.

“Among the comparable regional peers mentioned previously, The Bahamas recorded the strongest growth performance, exceeded only by Guyana,” he said. “For five consecutive years, our economy has expanded beyond the long-assumed 2 percent ceiling, a rate once treated as the upper limit of our country’s growth potential.”

Mr Halkitis said the 3.8 percent growth estimate for 2025 followed expansion of 4.2 percent in 2024, and surpassed the IMF’s earlier 2.8 percent projection for last year. “The Bahamian economy has not only regained its footing; it has outperformed expectations,” he said.

Mr Halkitis added that nominal GDP per capita was estimated at $42,722.8 in 2025, up 6.9 percent year-over-year and significantly above the regional average for Latin America and the Caribbean. He said tourism remained the dominant driver of economic activity throughout 2025 and into the first quarter of 2026.

“Total visitor arrivals reached approximately 12.5m visitors during 2025, representing growth of 11.4 percent over the previous year,” he said. Sea arrivals increased 13.8 percent to 10.8m visitors, while air arrivals totalled around 1.7m. As of March 2026, total arrivals had already reached 3.9m visitors, representing growth of 17.5 percent compared to the same period a year earlier.

Mr Halkitis also pointed to major gains in Grand Bahama following the opening of Carnival’s Celebration Key cruise destination. “Total arrivals to the island exceeded one million visitors during 2025, representing growth of 91.2 percent over the previous year,” he said.

Beyond tourism, Mr Halkitis highlighted broad-based gains across multiple sectors. Construction activity grew by an estimated 9 percent in 2025, supported by tourism developments, foreign direct investment (FDI) projects and public infrastructure works.

The utilities sector rebounded by 20.1 percent, which Mr Halkitis attributed to electricity grid modernisation, LNG-transition works and infrastructure upgrades supported by the Inter-American Development Bank (IDB).

Financial and insurance activities expanded by 19.8 percent, while transport and storage grew by 6.6 percent and accommodation and food services by 5.2 percent.

Agriculture, forestry and fishing grew by 8.4 percent, although mining and quarrying activity expanded by a more modest 0.6 percent due to climate-related impacts on salt production in Great Inagua.

Mr Halkitis also pointed to improving labour market conditions. Preliminary data from the Bahamas National Statistical Institute showed unemployment falling from 10.8 percent in March 2025 to approximately 9.3 percent by June 2025.

“These developments reflect ongoing economic recovery and continued expansion in employment opportunities for Bahamians throughout the domestic economy,” said Mr Halkitis.

He said inflation remained relatively subdued, averaging 0.6 percent during 2025 despite continued volatility in global commodity and energy markets. The Government projects inflation of 1.6 percent in 2026.

On the fiscal side, Mr Halkitis said total revenue for the first nine months of the 2025-2026 fiscal year increased by 3 percent to $2.5bn, supported largely by VAT collections, which rose 6.6 percent year-over-year to $1.1bn. Aggregate expenditure for the nine-month period totalled $2.7bn, producing a fiscal deficit of $157.5m, or 0.9 percent of GDP.