The Bahamas is projected to experience a 2.8 percent growth in its gross domestic product (GDP), according to a recent United Nations report, with fiscal measures and tourism activity considered critical factors to achieve the positive increase.
The 2012 Macroeconomic Report on Latin America and the Caribbean, conducted by the Economic Commission of Latin America and the Caribbean (ECLAC), revealed the potential uptick in GDP for the country.
Despite the challenges, there is still room for growth.
"The economy continues to recover, with growth edging up from 0.2 percent in 2010 to 1.6 percent in 2011," said a statement from the report. "The upturn in activity was driven by the tourism sector, which benefited from increased receipts from the higher value added stopover segment. Nevertheless, in a reversal of the situation before the crisis, higher fiscal deficits and escalating debt now present a major challenge to the economy.
"Therefore, a program of fiscal consolidation, supported by measures to boost the competitiveness of the tourism sector, will be an important part of the policy mix to achieve stable growth."
The report mentioned that the steady recovery of the United States economy was a key factor in the slight economic improvement in The Bahamas in 2011, evidenced by a 1.6 percent growth in real GDP. Increased activity in the tourism and construction sector during that year was beneficial, along with higher activity in the offshore financial services leading to improved investor confidence. Retail trade rose by 8.3 percent during 2011 as a consequence of the tourism activity, but real estate and commerce activity dropped by 4.1 percent.
The ECLAC report also highlighted other Caribbean countries that are expected to experience GDP growth in 2012, with Haiti leading the charge. Haiti is projected to have eight percent growth in 2012, followed by the Dominican Republic at 4.5 percent. Trinidad and Tobago is expected to have 1.7 percent growth, while Jamaica and Barbados are each projected to have a one percent improvement.
Activity in the first quarter of 2012 in certain areas such as construction and tourism have proven to be encouraging for The Bahamas, according to the report, but inflation and monetary conditions will pose a challenge going forward.
"Inflation is expected to increase marginally, influenced by firmer activity and high fuel prices," the report said. "The fiscal deficit is expected to grow as the new government implements key programs in its manifesto. Meanwhile, the balance-of-payments current account deficit is projected to widen as a result of the high bill for oil and other imports required for major projects."
The report in its entirety can be viewed on www.eclac.org.

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