IDB: 2026 until some economic indicators improve

The Bahamas per capita income level and public debt ratio will not return to pre-pandemic level until 2026, the Inter-American Development Bank’ (IDB) latest edition of the Caribbean Quarterly Bulletin notes, explaining also that while the country’s economy has experienced “green shoots” this year, the economy is “still struggling”.

According to the IDB report, The Bahamas’ current account deteriorated by more than 20 percentage points and is not expected to improve before 2026.

The bank contends the same will be true for the country’s inflated public debt.

“For several Caribbean economies, prospects for consolidation remain uncertain, while current estimates envision double-digit increases in public debt ratios through 2026 for several economies, including The Bahamas,” the IDB said.

According to the report, in 2026, The Bahamas’ per capita income percentage will reach only 95 percent of where it was in 2019, before the COVID-19 pandemic.

With tourism taking a massive blow last year, the IDB explained that real estate replaced it as the largest contributor to the country’s total gross domestic product (GDP) in the fourth quarter of 2020.

The report explained that real estate contributed 16.8 percent of GDP, posting a 2.6 percent decline year over year. 

Tourism has improved this year, though numbers remain below the record base year 2019.

“The increase in tourist arrivals in the first quarter of 2021 will have a positive impact not only on the tourism sector, but also on related sectors such as transport and retail trade,” the IDB report said.

The report noted that the country’s economy is still struggling as GDP declined 14.5 percent in 2020, and the country’s chief revenue earners bow under the continued weight of the continuing COVID-19 pandemic and slow return of tourism.

“Both the tourism and construction sectors were severely affected by travel restrictions and by lockdowns and social distancing measures,” the report stated.

“However, the roll out of the vaccine in The Bahamas as well as in important source markets such as the United States has allowed for more flexible restrictive measures.”

The report explains that the financial system in the country remains stable as commercial banks became much more resilient entities after the 2008 global economic downturn.

“As a result, the pandemic has not caused a major debilitation of the financial sector,” the report said.

“Although certain indicators of credit quality and bank profitability are deteriorating, and it is expected that they will continue to do so when the loan moratorium is lifted, the banking system remains well-capitalized and with sufficient liquidity. Nevertheless, the situation needs to be closely monitored.”

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source https://thenassauguardian.com/idb-2026-until-some-economic-indicators-improve/