Bahamas: Economic Outline

Economic Indicators

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The Bahamas is the wealthiest Caribbean country in terms of GDP per capita. The country has a history of positive GDP growth and, in 2022, GDP grew by 10.9%, driven by a rebound in economic activity led by the tourism industry, which had been suppressed during the pandemic. According to the IMF, GDP is expected to continue on its upward trajectory in 2023, albeit in a slower pace, recording an estimated growth of 4.2%. 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 country's public budget has been structurally in deficit. However, according to the IMF, the country's current account deficit decreased to an estimated 14.7% in 2022. Furthermore, the Government is committed to further fiscal consolidation, targeting an overall deficit of 1.8%. In 2022, government debt reached an estimated 89.4%, a rate which is expected to gradually decrease in the coming years, reaching 83.9% in 2023 and 83.5% in 2024. Furthermore, the country recorded an inflation rate of 5.6% in 2022, and it is projected to slightly increase to 4.5% in 2023 and 3.3% in 2024. Fiscal measures have been implemented to strengthen the financial system, controling public spending and increasing 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 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, which reached 12.3% in 2022. However, unemployment is expected to decrease in the comming years, reaching 12% in 2023 and 11.6% in 2024. 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.

Monetary Indicators	2016	2017	2018	2019	2020
Bahamian Dollar (BSD) - Average Annual Exchange Rate For 1 GBP	1.35	1.29	1.33	1.25	1.28

Source: World Bank - Latest available data.

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Latest Update: November 2023