Bahamian Economy Forecasted to Grow in 2008

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Several ministers attended the 17th annual Bahamas Business Outlook seminar which draws senior government officials, businesspersons, entrepreneurs and other sectors of Bahamian society to hear distinguished local and international authorities address a wide spectrum of thought provoking topics and subject matter.  Pictured, from left, are Minister of Lands and Local Government the Hon. Sidney Collie; Minister of Agriculture and Marine Resources the Hon. Lawrence Cartwright; Minister of Works and Transport the Hon. Earl Deveaux and Minister of State for Youth and Sports the Hon. Byran Woodside. (Photo: Kristaan Ingraham) 

By: Llonella Gilbert

NASSAU, The Bahamas
— The forecast for the country as supported by the International Monetary Fund (IMF) calls for the Bahamian economy to grow by about 4 per cent at the upper level and 3.5 per cent at the lower level in 2008.

Minister of State for Finance the Hon. Zhivargo Laing said this estimation comes even though some of the challenges presented by the global economy in 2007, such as high oil prices and the broadening impact of the US sub-prime mortgage crisis will continue to present some downside risk for The Bahamas.

“The growth will be underpinned by foreign investment projects both in the tourism and industrial areas that will come on stream, combined with a modest recovery expected in tourism output and robust public sector capital development programme.”

Mr. Laing explained that these include major road works, such as the New Providence Improvement Programme ($120 million), as well as the Lynden Pindling International Airport expansion and redevelopment ($400 million).

The dominant global theme in recent times has been the precipitous rise in crude oil prices and the subsequent run-up in energy and transportation costs, which resulted in downward revisions in growth forecasts during the course of 2007 across many national economies, Mr. Laing pointed out at the Bahamas Business Outlook Seminar Wednesday, January 9, 2008.

The seminar, now in its 17th year, draws senior government officials, businesspersons, entrepreneurs and other sectors of Bahamian society to hear local and international authorities address a wide spectrum of  topics and subject matter.

Mr. Laing said last October, the IMF revised its 2008 forecast for world output expansion down to 4.8 per cent from the 5.2 per cent expected in 2007 and 5.4 per cent noted in 2006.

In regards to the United States, he explained that the IMF in October revised its April estimate of forecast growth to 1.9 per cent in the US in 2008, down from an earlier 2.8 per cent and in line with the same growth expected in 2007.

“However, should the US economy move towards a recession, or even to a position of more marginal growth, as the odds appear to be gaining, there could be implications for US consumer spending and hence the performance of out tourism sector.

“From a policy perspective,” Mr. Laing said, “we will seek to ensure that our tourism marketing initiatives are able to tap into other markets, such as Canada, Western Europe and to a lesser extent Asia, which have all benefited from the sustained depreciation of the US Dollar.”

He explained that to the extent that the country is successful these gains should compliment the ongoing initiatives to expand domestic tourism capacity and secure a stable to improved outturn for tourism earnings in 2008.

Mr. Laing also noted that construction and tourism investment sectors are expected to be relatively strong in 2008, with the coming on stream of resort and real estate projects in New Providence (Baha Mar, Albany and Kerzner Phase IV) and Grand Bahama (the Royal Oasis and Ginn Development); and the other Family Island projects (Royal Island, Rose Island) and the continuation of such projects as the Baker’s Bay Development.

Mr. Laing also explained that with regard to the monetary system, liquidity in the banking sector should strengthen in 2008, supported by foreign investment and tourism inflows and stable interest rates.

“Consequently, the money supply and, in particular, savings in the banking system should grow at a healthy pace which, combined with sustainable credit expansion, should improve our foreign reserves performance.”

With reference to capital market development, Mr. Laing pointed out that the Government supports the ongoing efforts to enhance the growth and development of the local capital market by making foreign currency resources available to local brokers and dealers for the development of Bahamian Depository Receipts and other innovative securities.

“This will foster greater diversity and availability of alternative investments to the Bahamian investing public, and provide another avenue for investors to participate in the international capital markets.

“The Government will continue to support such efforts and anticipates that this will further strengthen domestic savings in 2008.”