The Central Bank Of The Bahamas’ Contribution To The
2016-2017 Budget Communication
In the commodity markets, the Fund projects that average crude oil prices will slump by
inventory levels and robust supplies from major producers. In addition, the reduction in non-fuel
commodity prices is forecasted to slow sharply to 9.4% in 2016 from 17.5% in the prior period.
In particular, food and metals costs are anticipated to decline by 5.6% and 14.1%, compared to
decreases of 17.1% and 23.1%, respectively, reco rded in the prior year.
DOMESTIC ECONOMIC DEVELOPMENTS
Annex A
31.6% to approximately $34.75 per barrel in 2016, due to downside price pressures such as high
Preliminary estimates from the Department of Statistics showed that real GDP
contracted by 1.7%, extending the revised 0.5% falloff in 2014. Underlying this outturn was a
significant reduction in foreign investment-led construction output, as work on the multi-billion
dollar Baha Mar development drew to a close. The resort’s stalled opening however,
constrained tourism’s potential, although stopover gains still persisted. Against this backdrop,
labour market conditions remained weak, with the unemployment rate increasing during the six
months to November 2015, over the prior period. In price developments, the firming in the
inflation rate due to the introduction of the VAT was muted, owing to the falloff in energyrelated costs from the continued slump in international oil prices. On the monetary front,
buoyant liquidity levels persisted, reflecting the ongoing weakness in private sector demand,
while net foreign currency inflows from real sector activities supported modest growth in
external reserves. Banks’ credit quality indicators improved in 2015, due in part to debt
restructuring activities and sustained loan write-offs. In fiscal developments, accretions to the
National Debt slowed in comparison to the prior year, while on the external front, the
estimated current account deficit narrowed sharply, underpinned by a rise in the services
account surplus, owing to a significant reduction in construction service outlays, and a fuelrelated decline in the merchandise trade deficit. Similarly, the capital and financial account
surplus contracted considerably, as inflows related to a foreign investment project were largely
unwound, and public sector net external borrowings showed a significant contraction.
TOURISM
Indications are that the tourism sector’s performance improved modestly in 2015,
reflecting on-going gains in the high value-added stopover segment, supported by improvements
in several key visitor source markets, as well as increased airlift and hotel capacity. Over the
twelve-month period, total air arrivals grew by 3.6% to approximately 1.4 million, although
lower than the 4.9% advance in the prior year. Conversely, the dominant sea component
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2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE