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The Bahamas is poised for its fastest economic growth in a decade as an improving U.S. jobs market helps boost tourism, central bank Governor John Rolle said.
Growth in the $8.5 billion economy will accelerate to slightly less than 2 percent this year and closer to 3 percent in 2017 as visitor numbers pick up and a stalled $3.5 billion resort, Baha Mar, finally opens, probably before the peak tourism season begins in December, he said. The economy expanded 1.2 percent last year and hasn’t grown by more than 2.5 percent since 2006, according to the International Monetary Fund.
“There’s a momentum shift in terms of the level of economic activity in the tourism sector,” Rolle, who was appointed to his post last month, said in a phone interview from Nassau. “Baha Mar is important in terms of getting back to the level we had, but beyond that there has to be a focus on attracting new investments and growing the economy from other private investments.“
The 700-island archipelago has long been popular with celebrities such as Johnny Depp, Shakira and Nicolas Cage, who own homes there, but lost out to cheaper destinations such as the Dominican Republic in the aftermath of the 2008 global financial crisis. The Bahamas saw its share of the tourism market fall the most among major Caribbean destinations in the 2007-2013 period, according to a 2014 study published by the International Monetary Fund.
The China-funded Baha Mar, which is 97 percent complete on Nassau Island, was supposed to give a lift to the tourism-dependent economy when it was originally scheduled to open in 2014. Instead, it has been held up in a legal battle and remains shuttered. Its failure to open led Standard & Poor’s last year to lower its rating on The Bahamas to BBB-, the lowest investment-grade level.
Investors have shown an appetite to continue to build, including a $200 million, 5-star resort in the Exumas, an area of the Bahamas known as the “out islands.” In early February, the government approved a $168 million expansion to the Deep Water Cay resort on Grand Bahama island.
Rolle, 58, a Canadian-educated economist who formerly held the position of Financial Secretary in the Ministry of Finance, was instrumental in implementing a value-added tax that has helped the government broaden its tax base. With revenue up 40 percent, the government cut the fiscal deficit by nearly half to $134 million in the five months ending in November, the central bank said in a report this month.
Debt as a percentage of gross domestic product rose to 73.4 percent in 2014 from 66.2 percent the previous year, according to the last full year economic report released by the bank. The debt load was forecast to fall to 68.1 percent last year. Rolle said he expects fiscal consolidation to continue.
This article was written by Ezra Fieser from Bloomberg and was legally licensed through the NewsCred publisher network.