Monday, July 20, 2009

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Central Bank: Recovery no sooner than late 2010 By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: The Bahamian economy is expected to remain weak over the remainder of the year, reiterates a new Central Bank report, also pointing to the latest tourism data suggesting a much steeper overall decline in arrivals the first five months of this year relative to also flat 2008 period. "The latest data on tourism suggest a much steeper overall decline in arrivals during the first five months of the year, after a 0.9 percent reduction experienced in the corresponding period of 2008," says the monthly economic report for May, released Thursday. "Underscoring the persistent weakness in the stopover segment was a projected double digit downturn in air arrivals, which outpaced a modest recovery in sea traffic." By port of entry, New Providence trends were dominated by a decline in the air segment, continues the report. It offset a projected improvement in sea arrivals; while more sizable stopover declines also contributed to reduced activity in Grand Bahama and the Family Islands. That losing hand has likely contributed the lion's share to the dismal picture the bank is drawing for the same period. It doesn't augur well for the rest of the year, says the bank report. "Lingering tightness in global credit markets should further constrain foreign investments and consequently construction activity, notwithstanding steadied support from equity financed projects and a continued, but moderated pace of domestic investments," it reads. "Under these conditions, a further rise in the unemployment rate is likely before any stabilization is secured. "Although the government's sustained investments in public works are likely to temper the slowdown in private sector activity, the strain on revenue collections is expected to maintain the fiscal deficit and the debt to GDP ratio at elevated levels in the short-to medium term." Turning to earnings indicators, the bank says total inflows remained contracted in comparison to 2008, with stopover receipts hammered by projected declines in both hotel room night sales and average daily room rates. Modest gains in cruise visitor inflows have not been enough to turn that ship around. The bank asserts that "the prospects of a recovery (is) delayed until the latter half of 2010, lagging the anticipated turnaround in the U.S. economy." In the short-term, the downturn in stopover arrivals, coupled with discounted hotel room pricing, should pose ongoing constraints on tourism output. Perhaps the one good bit of news, although likely shortlived was further easing of inflationary pressures. "As external price pressures eased, the annual domestic inflation rate decelerated to 1.8 percent in May from 4.9 percent in 2008," the report says. Still, the 12-month average rate remained significantly higher at 4.6 percent. It's likely to further climb as oil prices begin to move upward once again. Friday, July 3, 2009