The Central Bank Of The Bahamas’ Contribution To The
2016-2017 Budget Communication
ECONOMIC OUTLOOK FOR 2016
Annex A
Expectations are that domestic economic activity will show signs of stabilization, as the
hosting of a number of international events and sustained growth in several major markets,
support gains in tourism output—although competitive pressures are anticipated to further
intensify. Similarly, activity in the construction sector will be supported by a number of variedscale foreign investment projects in both the capital and the Family Islands. The restart of the
Baha Mar project would also enhance growth prospects and provide near-term opportunities
for gains in employment. Inflationary pressures are anticipated to remain benign, as global oil
prices are projected to remain well below pre-recession levels over the near-term.
Monetary sector developments should be dominated by high levels of bank liquidity,
reflecting the weakness in consumer demand and banks’ conservative lending stance in the face
of high levels of arrears and NPLs. Despite these challenges, domestic financial conditions should
remain stable, as banks are still well capitalized, with average ratios in excess of regulatory
requirements.
The near-term outlook for external reserves is also mildly stable, owing mainly at this
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2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE
juncture to the conservative lending posture of commercial banks, slightly improved tourism
prospects and reduced oil price pressures.
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