2019/20 Budget Communication Final Budget Communication | Page 26

I now turn to a summary of fiscal performance in fiscal year 2018/19; however, before
I do so, I would like to give a brief synopsis on developments in the global and domestic economic
environments, as these frame our fiscal planning and projected outcomes.
IV.
The Global Economy
Mr. Speaker,
It goes without saying that the health of the global economy, and that of the U.S. in
particular, are vital to the buoyancy of future prospects for our domestic economy. As a small and
very open economy, the external environment is determinative in respect of both the strength of
Bahamian exports, and of tourism activity specifically, as well as inflows of foreign direct
investment that underpin the expansion of the productive capacity of our economy.
Accordingly, I now turn to a brief discussion of recent developments in, and prospects
for, the world and U.S. economies. This will set a proper context for the subsequent review of
recent domestic economic developments and prospects for the near term and beyond.
The stark reality is that the external economic environment has deteriorated
appreciably since the last Budget Communication. Moreover, uncertainty in respect of future
developments has also increased. These realities presented particularly daunting challenges for
the Government as we set about developing the economic and fiscal policy framework for the
2019/20 Budget.
At the time of the last Budget, prospects for the world economy were relatively bullish
and the forecast for the growth of the world economy was the most buoyant that it had been since
the start of the decade. Indeed, in the IMF World Economic Outlook of twelve months ago, world
growth was pegged at just under 4 percent in both 2018 and 2019. These developments reflected
expansionary fiscal policies in the U.S., supportive global financial conditions and an ongoing
upswing in global investment and trade.
Unfortunately, developments over the past year have now cast a definite cloud on the
forecast for world economic growth. Indeed, tighter financial conditions, a softening in business
confidence, increased policy uncertainty and the ongoing trade war between the world’s two largest
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