2019/20 Budget Communication Final Budget Communication | Page 29

V.
The Domestic Economy
Mr. Speaker,
As for recent developments in the domestic economy, preliminary National Accounts
data released this month by the Department of Statistics reveal that real GDP growth improved
significantly to 1.6 percent in 2018, from the revised 0.1 percent real growth recorded in 2017.
This outcome was supported primarily by more buoyant economic activity in several sectors,
including real estate, wholesale and retail trade, accommodation and food services and financial
and insurance services.
More buoyant activity in the tourism sector was also a major contributor to stronger real
growth last year and into this year. The number of total visitor arrivals grew by 7.9 percent to 6.6
million in 2018, a reversal from the 2.1 percent decline in 2017, and the strongest growth since
2010. Corresponding with increased demand following an expansion in room capacity in New
Providence and a surge in the Family Islands, the high value-added air component increased by
16.7 percent to 1.6 million, vis-a-vis a 4.0 percent decline in 2017—representing the largest
expansion in over a decade. In addition, the larger volume sea segment grew by 5.5 percent to 5.1
million, a turnaround from the prior year’s 1.5 percent contraction.
Activity in the construction sector in 2018 was underpinned by several foreign
investment-related projects, as well as an improvement in domestic construction activity.
In line with the rebound in economic activity, labour market conditions continued to
improve in 2018. More specifically, the number of employed persons increased by 3.4 percent
over the twelve months to November 2018. However, the growth of the labour force remained
relatively buoyant, given the entrance of new job seekers and the return of previously discouraged
workers. As a result, the national unemployment rate rose by 0.6 percent to 10.7 percent in
November of last year.
Domestic prices rose modestly throughout 2018, largely reflecting the one-time effects
of the increase in the VAT rate and higher global oil prices. According to the All Bahamas Retail
Price Index, inflation rose by 75 basis points to 2.3 percent over the year, as broad-based gains
were recorded for almost all the major categories of the Index. However, the average costs for
communication, clothing & footwear and education contrasted by registering declines during the
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