In addition, the DOS also presented its first
estimate of real economic growth for 2015.
These data suggest that the contraction in
real economic activity widened further last
year, to the tune of -1.7 per cent. This estimate stands in contrast to the projected
positive rate of real growth of 2.3 per cent
presented in last year’s Budget Communication, which had been developed by the
Ministry of Finance in conjunction with the
staff of the IMF. The estimates of real growth
in the Bahamian economy presented by the
major ratings agencies at various times following the May Budget also featured positive rates of growth for 2015.
[8]
2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE
I would note that these new data from the
DOS have direct and important implications
for the fiscal ratios that are presented in
the Budget Communication and which are
key features of the Government’s Medium
Term Fiscal Consolidation Plan. For instance,
the value of nominal GDP, which is used as
the denominator in our fiscal ratios, is now
estimated at $8,736 million in fiscal year
2014/15, down $35 million from last year’s
Budget forecast.
More significantly, the value of nominal GDP
in the 2015/16 fiscal year is now estimated
at $8,944 million, down considerably from
$9,220 million in last year’s Budget.
The weakness in real economic activity in
2015 was due primarily to softer output
in the construction sector. Positive growth
was, however, registered by a number of industries, including wholesale and retail trade,
banking, real estate, business services and
public administration, health and education
and community, social and personal services.
The softness in the construction sector reflected a significant fall-off in foreign investment-led construction output, as activity at
the Baha Mar project wound down.
Our key tourism sector recorded ongo-
ing, though still modest, improved performance in 2015, primarily reflecting
continuing gains in the high value-added
stopover segment of the industry. This development reflects further improvements
in our key tourist source markets, as well
as improved airlift and hotel capacity. Total air arrivals expanded by 3.6 per cent
last year, on the heels of the 4.9 per cent
growth registered in 2014.
Activity in the domestic construction sector posted mixed signals in 2015. Mortgage
loan disbursements for new construction
and repairs in the residential segment grew
by an appreciable 35 per cent last year, a
reversal from the 8 per cent decline in the
previous year. This performance contrasts
to that in the smaller commercial segment,
where disbursements fell to roughly $10
million from $15 million in 2014.
On the labour market front, developments were impacted by the softness in
economic activity registered in 2015. As
reported by the Department of Statistics,
the national rate of unemployment in November 2015 stood at 14.8 per cent. That
represented an increase of 2.8 percentage points from the rate of 12 per cent
reported six months earlier, though the
latest rate was still 0.9 percentage points
lower than it had been in November 2014.
The rise in the unemployment rate last
year reflected a number of factors, including seasonal effects such as the entry into
the labour force of new high school and
university graduates, a fall in the number of
discouraged workers and the layoff of over
2000 workers at the Baha Mar project.
Of particular concern, the rate of unemployment for the youth of our nation, aged
15 to 24 years, continued at the unacceptably high level of 30 per cent and this is an
issue that we are committed to addressing aggressively through both the growth
strategy that we are pursuing and the ap-
prenticeship and training programmes that
I discussed earlier.
Consumer price inflation continued at a
moderate pace of 1.9 per cent in 2015,
up slightly from the previous year. While
the introduction of VAT contributed some
measure of one-time upward pressure,
overall inflation was tempered sig