Bahamas: Economic Outline

Economic Indicators

The Bahamas, the wealthiest Caribbean nation in terms of GDP per capita, is heavily reliant on tourism—mainly from the U.S., Canada, and the UK—and has seen economic activity recover to pre-pandemic levels. However, growth remains constrained by its small, undiversified economy, high import dependence, limited hotel capacity, vulnerability to external shocks, skill shortages, and tight fiscal space. Real GDP grew by an estimated 1.9% in 2024, down from 2.6% in 2023, with tourism as the main driver, although growth was dampened by accommodation limits and a levelling off in air arrivals. Ministry of Tourism data show total visitor arrivals rose by 16.2% to 11.2 million, led by a 19.7% increase in cruise visitors to 9.5 million, while air arrivals dipped 0.2% to 1.7 million after a strong rise in 2023. According to the World Bank, GDP growth is projected to slow to 1.1% in 2025, 1.2% in 2026, and 1.3% in 2027, in line with the long-term potential growth rate. The economy will remain dependent on strong tourism activity, particularly cruise arrivals and related investment projects.

The country, which has maintained a 1:1 peg with the U.S. dollar since 1973, continues to face high public debt and substantial financing needs. In FY2023/24, the government posted a primary surplus of 2.9% of GDP, up from 0.3% the previous year. The overall deficit narrowed to 1.3% of GDP, supported by a 7.7% rise in revenues and a 3.7% drop in expenditures. As a result, central government debt declined to 84% of GDP, and external debt to 34.6% (data from the World Bank). Fiscal consolidation is expected to continue, with a surplus projected in FY2025/26 and the primary surplus remaining above 4% of GDP, driven by tax reforms and spending restraint. The current account deficit is set to improve gradually with stronger tourism, while public debt is expected to continue its downward path. Inflation eased significantly in 2024 after averaging 3.1% in 2023, turning negative from July. Hotel and restaurant prices fell 2.6% annually, reflecting global competitive pressures. Due to the currency peg, domestic interest rates closely follow the policy of the U.S. Federal Reserve. Inflation was estimated at -0.2% year-on-year in 2024, with an annual average of 0.4%, and is expected to converge to 2% over the medium to long term (World Bank data). Risks to the outlook include trade policy uncertainty, global economic or financial shocks, and extreme weather or geopolitical tensions that could raise inflation and disrupt food supply chains. Slower growth in advanced economies may also dampen tourist arrivals.

The country's high levels of human development and GDP per capita mask important structural, economic, and social challenges: significant income inequality, high unemployment, a weak skills base, an inefficient public sector, and inadequate infrastructure. Moreover, over four-fifths of the population is concentrated on the islands of New Providence and Grand Bahama, which creates challenges for transportation, public administration, and employment. Furthermore, although the Bahamas’ poverty rate is among the lowest in the region, it has been growing in the context of inadequate social safety nets. Labour force participation returned to pre-pandemic levels at 73.4% in 2024Q2 (69.8% for women, 77.4% for men). Unemployment averaged 8.7% in H1 2024, with youth unemployment at 19.6% in Q2. Notably, 78% of the unemployed have at least secondary education, and 15.6% hold a tertiary degree, suggesting a mismatch between education, training, and labour market needs (World Bank data). Overall, the country’s GDP per capita (PPP) was estimated at USD 37,564 in 2024 by the IMF.

Monetary Indicators	2020	2021	2022	2023	2024
Bahamian Dollar (BSD) - Average Annual Exchange Rate For 1 GBP	1.28	1.38	1.23	1.24	1.28

Source: World Bank - Latest available data.

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Latest Update: October 2025