NASSAU, Bahamas – The Bahamian economy continues on a robust three percent growth as indicated by the Central Bank of The Bahamas, the Minister of State for Finance the Hon Zhivargo Laing said.
He was responding to statements by Opposition Leader the Rt. Hon. Perry Christie that the economy has slowed down since the Free National Movement came to power in May because of the government’s review of major investment projects previously approved.
“This statement is baseless,” Mr. Laing said during a press conference at the House of Assembly on Monday, November 12. “According to Central Bank statistics, foreign direct investment inflows to The Bahamas in the first six months of last year totalled $279.1 million compared to $351.7 million this year.”
This means that foreign direct investment inflow in the first half of this year was $72 million or 26 percent higher than for the same period last year, Mr. Laing explained.
“Clearly then, it cannot be a decline in foreign investment inflows that has contributed to any economic slow down that might have occurred this year compared to last year,” he said.
The Central Bank acknowledges that the Bahamian economy continues to grow at a rate of 3.0 percent. Its preliminary data suggest that this growth has been moderated when compared to August last year.
“What we do not now know is the extent of the slow down that the Central Bank has suggested because there is no way to quantify the same in our current statistical environment. However, that there may be some slow down is not surprising, given a number of factors,” Mr. Laing said.
The Minister of State for Finance cited three factors which could impact the Bahamian economy. Firstly, the US Economy upon which the Bahamian economy relies slowed down in 2006 from 2.9 percent to 2.6 percent in 2005 and took a sharp decline in the first quarter of 2007 to 0.6 percent.
Secondly, Mr. Laing pointed to a substantial decline in domestic credit expansion in The Bahamas of between six and eight percent. Thirdly, he pointed to a slowdown in tourism arrivals and spending, which began in 2004, highlighting lastly a substantial increase in oil prices which in August 2006 was around $70 per barrel. This price has steadily increased to almost $100 per barrel.
“This significant increase in oil prices has increased our import bill, general prices, impacted negatively on foreign reserves and thus likely, impacted on the growth of the economy,” Mr. Laing said.
According to Mr. Laing, Opposition Leader the Rt. Hon Perry Christie could have, but chose not to, point to the following economic factors:
· The Government’s overdraft was $97.16 million in May 2007, some 9 percent higher than the Opposition Leader met in place in 2002, a time when the then government claimed the economy was worse than when they left office;
· 2006/2007 is likely to see a deficit outturn of more than three percent, which is almost twice the 1.6 percent level forecasted, a difference of some $89 million; and
· A devastated Grand Bahama economy with substantial unemployment coupled with stagnant employment levels in most Family Islands.
“The Bahamian economy continues on a robust three percent growth path, as indicated by the Central Bank,” Mr. Laing said. “It has likely moderated compared to last year, a fact which even the IMF confirms but its prospects for increased growth to four percent next year is quite likely, a prospects the IMF also supports.”
He added: “No alarmist statements by those who seek political gain by some pretence of decline of the Bahamian economy will change that reality.
“We in this administration continue to be vigilant in observing both international and national events that influence our economic prospects and will continue to do so in order to ensure the best interest of our people.
