flag Bahamas Bahamas: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Bahamas is the wealthiest Caribbean country in terms of GDP per capita. The country has a history of positive GDP growth and, even though GDP decreased in 2020 due to the COVID-19 outbreak, the economy of the Bahamas recovered in 2021, with a growth rate reaching an estimated 2% (IMF). In 2022, GDP is expected to continue on its upward trajectory, reaching 8%, mainly due to a significant growth in export and household consumption driven by the rebound in tourism - the country's largest economic sector. With few natural resources and a limited industrial sector, the economy depends heavily on tourism and, to a lesser degree, on financial services. Tourism together with tourism-driven construction and manufacturing accounts for approximately 60% of GDP and directly or indirectly employs half of the country's labour force. Financial services constitute the second sector in terms of size, accounting for about 15% of GDP.

The public budget has been structurally in deficit. According to the IMF, the country's current account deficit increased to an estimated 20.9% in 2021, mainly due to the COVID-19 pandemic and the long-lasting effects of Hurricane Dorian, which hit the Bahamas in 2019 and caused an estimated damage of USD 3.4 billion - about a quarter of the country’s GDP. However, the Government established a disaster relief fund as part of a broader strategy for risk reduction policies, which should slightly reduce the impact of Hurricane Dorian on the country's economy. The Government is committed to further fiscal consolidation, targeting an overall deficit of 1.8%. In the 2020/2021 budget, the government decided not to increase taxes, given the negative impact that both Hurricane Dorian and COVID-19 had on many households. As such, government debt is reached an estimated 102.5% in 2021. However, that rate is expected to gradually decrease in the coming years, reaching 94.2% in 2022 and 92.3% in 2023. Furthermore, inflation rate was 3% in 2021, and it is projected to slightly increase to 4.2% in 2022 before decreasing to 3.2% in 2023. Fiscal measures have been implemented to rectify the situation and strengthen the financial system. They aim to control public spending and increase public revenues to create fiscal space for necessary expenditures. The government recently implemented the Fiscal Responsibility Law, which supports the efforts to secure fiscal sustainability and put debt on a downward path, and should increase transparency and enhance policy credibility. The government also implemented measures in response to the economic crisis resulting from the COVID-19 pandemic throughout 2020 and 2021, which included increased spending in health care and food programmes, temporary income support for job loss workers and self-employed, and tax deferrals for companies that met certain criteria. Overall, although the pandemic had a significant impact on the Bahamian economy, the measures implemented by the government in light of the crisis have been effective in boosting economic activity, which has been gradually recovering.

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. According to IMF estimates, the Bahamas suffers from a relatively high rate of unemployment and, although that number more than doubled due to the COVID-19 pandemic, peaking at 25.4% in 2020, unemployment decreased to 21.5% in 2021 and it should continue on a downward trend in 2022, when the rate is expected to reach 15.2%. 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. Also, the crime rate in the country is very high, with one of the highest homicide rates in the region.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 13.16e9.91e10.6812.0412.88
GDP (Constant Prices, Annual % Change) 0.7-14.52.08.04.0
GDP per Capita (USD) 34,576e25,73427,43730,58532,368
General Government Gross Debt (in % of GDP) 59.775.2e102.594.292.3
Inflation Rate (%) 2.50.03.04.23.2
Current Account (billions USD) 0.53-1.79e-2.23-1.90-1.54
Current Account (in % of GDP) 4.0-18.1-20.9-15.8-11.9

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Bahamian Dollar (BSD) - Average Annual Exchange Rate For 1 GBP 1.351.291.331.251.28

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.2 14.5 83.3
Value Added (in % of GDP) 0.6 12.9 71.2
Value Added (Annual % Change) -11.9 4.6 -0.1

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 20212022 (e)2023 (e)
Unemployment Rate (%) 21.515.211.5

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 226,108229,479221,175

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 81.22%81.34%81.46%
Men activity rate 86.70%86.74%86.78%
Women activity rate 76.09%76.26%76.46%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
64,6/100
World Rank:
70
Regional Rank:
13

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Sources of General Economic Information

Main Online Newspapers and Portals
The Bahama Journal
The Nassau Guardian
Bahamas Press
The Tribune
EyeWitness News
The Bahamas Investor
Bahamas Newspapers, Magazines and News Sites
Official tourism website of Bahamas
Useful Resources
Ministry of Finance
Ministry of Foreign Affairs
Ministry of Financial Services, Trade and Industry and Immigration
Ministry of Agriculture and Marine Resources
Ministry of Tourism, Investments and Aviation
Central Bank of The Bahamas
 
 

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Latest Update: May 2022

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