Thursday, Jul 18, 2019

IMF expresses some concerns for Bahamas economy

IMF expresses some concerns for Bahamas economy
02 Jul
2019

The International Monetary Fund (IMF) says while it welcomes the strengthening economic activity and the prospect of continued growth in the Bahamas, it is still concerned at the high unemployment rate, rising public debt and risks associated with external imbalances.

The Washington based financial institution has since underscored the need for the Hubert Minnis administration to rebuild policy buffers, safeguard financial stability and further enhance resilience to natural disasters.

The IMF is projecting that economic growth will be 1.8 per cent this year before converging to its potential of 1½ per cent in the medium term.

It said the increase in inflation is projected to have been temporary.

“Domestic bottlenecks and lagging economic diversification constrain medium-term growth, and unemployment is projected to decline only gradually. External accounts are expected to strengthen over the medium-term, backed by high tourism receipts, fiscal consolidation and lower oil prices, and the current account deficit is projected to converge to five per cent of real gross domestic product (GDP)

The IMF noted that real GDP expanded by 1.6 per cent in 2018, up from 0.1 per cent the previous year.

It said that economic activity was supported by tourism, while foreign investment projects continued to provide the impetus for construction sector activity. The consumer price index (CPI) increased by 2.2 per cent on average in 2018 due mainly to the Value Added Tax (VAT) rate increase from 7.5 to 12 per cent in July last year.

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