NASSAU, The Bahamas – Prime Minister, the Rt. Hon. Perry G. Christie expresses optimism for the nation’s finances in the near future. The Prime Minister said that the recent projection by the International Monetary Fund (IMF) is evidence of ‘strong prospects’ for the world economy. A stance, he feels, positions the Bahamas in a positive direction. The Prime Minister made the statement while delivering his statement on the mid-year budget on Wednesday, February 11.
As evidenced by the most recent World Economic Outlook of the International Monetary Fund (IMF), published at the end of January of this year, near-term prospects for the world economy feature strong so-called ‘cross-currents’ with a rising divergence between the United States, the Euro zone and Japan. Important financial, fiscal and structural adjustment challenges persist in a number of countries, “ said Mr. Christie. In aggregate and despite a sharp reduction in world oil prices, the overall outlook for the global economy has been adjusted downwards to 3.5 per cent and 3.7 per cent growth in 2015 and 2016, respectively.
These forecasts are one-third of a point lower than the October 2014 forecast. However, and of particular significance for the growth prospects of the Bahamian economy, the latest IMF forecast calls for a significant upward revision to the near-term outlook for the U.S economy. He said that this bodes well for the country, given that the United States is the Bahamas’ most significant trading partner and source of tourism dollars. He noted it was ‘encouraging’ to see that the U.S. is forecast to register real growth of 3.6 per cent this year, up fully one-half of a percentage point from the October forecast.
In addition, growth for 2016 has been projected upward to 3.3 per cent. He said that in addition to the beneficial effects of ongoing accommodative monetary policy, this also reflects the positive impact of lower oil prices on real incomes and consumer sentiment in the U.S. In turn, it has translated into robust private domestic demand that augurs well for the growth of our dominant tourism market.
This optimism for U.S. economic prospects has also been reflected in the Conclusions of the most recent meeting of the Federal Open Market Committee of the U.S. Federal Reserve—the American Central Bank,” he said. “The Committee asserted at the end of January that economic activity in the U.S. has been expanding at a solid pace, with strong job gains and a lower rate of unemployment. Mr. Christie said that in reference to the local economic prospects, a recent report of the Central Bank of The Bahamas suggests that the Bahamian economy should also maintain its upward trajectory.
The Prime Minister said that The Central Bank sees the clear potential for “further strengthening” of the Bahamian economy as sustained growth in the U.S. and the phased opening of the Baha Mar resort support what is projected to be appreciable gains in our tourism sector. In addition, he said that continued work on the many foreign investment projects would provide ongoing support to activity in the construction industry. “As a result of all this new economic resurgence in The Bahamas, employment conditions in The Bahamas are expected to improve steadily both this year and beyond,” he stated. The latest growth forecast that the IMF has published for the Bahamian economy is contained in its October World Economic Outlook.
The IMF projects real growth for the country this year and next year at around 2 percent. “ I should add,” said Mr. Christie, “that I now see this forecast as somewhat conservative in light of the fact that the IMF has more recently boosted its growth forecast for the U.S. economy to an appreciable degree. As a result, our own growth prospects may be even better than last projected by the IMF.
Mr. Christie said that he believes that the near-term prospects for the country’s economy must be placed in proper context in order to fully appreciate the concrete progress that has been taking place in the country’s economic growth agenda. “Real growth on the order of 2 per cent in the near term, while still below the higher rates of economic expansion that we require to absorb our growing labour force, has not been experienced in The Bahamas in almost a full decade, so it comes as excellent upbeat news indeed!”