In August of this year the international ratings agency, Standard and Poor's (S&P), hinted that there was likelihood that at its next review of the Bahamian economy, a downgrade was possible.  S&P recently released its latest assessment of the Bahamian economy at the end of October and true to form, the report downgraded the country's credit rating status.  The agency explained the downgrade in terms of a change in methodology in assessing countries by placing a greater emphasis on the degree to which an economy was diversified.
Given the existing structure of the Bahamian economy, an extraordinarily heavy reliance on one economic sector (tourism) for employment and growth together with an equal over-dependence on a single market (U.S.) for the majority of its visitors, we were the perfect candidate for a downgrade under the new system.  The downgrade by and of itself is of less importance than the type of policy response we propose to address what is essentially a challenge to sustainable economic growth and social development in a 'one-crop' economy.
One possible approach to our current position might be to subject the economy to a type of analysis, commonly used in the private sector, to determine whether the firm should change direction in order to successfully survive or even prosper in a changing marketplace.  That analysis, referred to as SWOT, is an attempt to realistically assess the firm's, Strengths, Weaknesses, Opportunities, and Threats.  In the context of the Bahamian economy, a cursory examination would reveal some interesting features.
Strengths: Stable political and economic environment; modern telecommunications and Internet facilities; trained and trainable labor force, particularly in the services sector; vast marine and land resources; easy access to local and international capital markets; a sizeable pool of local and foreign entrepreneurs; a modern legal system; international accounting firms; and the existence of business incentive legislation.
Weaknesses: Concentration of economic activity in a single sector; relatively small section of the labor force trained in technical areas; very little resources allocated for research and development of other economic sectors; relatively high cost of local capital and labor; slow and laborious system for dispute settlement and licensing requirements.
Opportunities: Attracting more tourists from the Far East; developing a true 'free' zone for international trade, similar to Panama; developing medical tourism like the offshore banking sector; further, given the large volume of existing and planned visitor accommodations throughout the country, the growing demand for food, furniture and equipment, entertainment and leisure activities against the background of an extraordinary level of imports for local consumption, there is a real possibility of increasing domestic production to lessen the dependence on imports.
Threats: Rising crime levels could negatively impact our tourism market; our failure to heed the warnings or take seriously the advice of ratings agencies and other well-meaning commentaries on the challenges facing our economy and the preservation of living standards throughout The Bahamas; a continuation of the global recession and a failure of the U.S. economy to rebound in such a way that travel to The Bahamas is restored to pre-recession levels could have debilitating effects on the economy.
In short, the fundamentals of the Bahamian economy are still solid.  However, the shocks to the economy over the past two years may give reason to pause, reflect and perhaps set a new course for growth and development, taking into account the new circumstances within which we find ourselves.

Click here to read more at The Nassau Guardian