THE CENTRAL BANK OF THE BAHAMAS’ CONTRIBUTION
The Central Bank Of The TOBahamas’
Contribution To The
THE
2016-2017
Budget Communication
2016-2017 BUDGET COMMUNICATION
Annex A
INTRODUCTION
The most recent estimates from the Department of Statistics indicated that the
domestic economy contracted by 1.7% in 2015, following a 0.5% fall in the prior year. The
reduction in real GDP was attributed largely to a decrease in construction sector output, as
work on the multi-billion dollar Baha Mar project was substantially concluded, as well as lower
output in the mining and manufacturing industries. However, the delayed opening of the resort
constrained tourism’s potential.
Given the falloff in overall economic activity, employment
conditions remained challenging—particularly among young persons. Consumer price inflation
firmed marginally over the year, as the effects of the implementation of Government’s new value
added tax (VAT) regime were mitigated by the sharp reduction in global oil prices. In monetary
developments, net foreign currency inflows from real sector activities and public sector debt
operations boosted liquidity and external reserves, given the ongoing weakness in private sector
credit, as households continued to deleverage.
INTERNATIONAL ECONOMIC DEVELOPMENTS
According to the International Monetary Fund (IMF), world output grew by an estimated
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2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE
3.1% in 2015, slightly lower than the 3.4% expansion recorded in the prior year 1 . The
moderation in global growth reflected the slowdown in China, as the country shifted towards
consumer demand as a key driver of economic activity, combined with weakness in several
commodity-exporting countries, while growth among the developed markets remained subdued.
In the United States, real GDP growth steadied at 2.4%, as moderated gains in nonresidential fixed investment and exports overshadowed the growth in personal and Government
expenditures. Labour market conditions continued to improve, as the unemployment rate fell
by 10 basis points to 5.3% in 2015 over the prior year, owing in large measure to increased
hiring in the professional & business services and health care sectors.
1
Further, reflecting
Source: IMF’s World Economic Outlook, April 2016.
1