Economy of the Bahamas

Economy of Bahamas
Currency Bahamian dollar (BSD)
1 July - 30 June
Trade organisations
 WTO, CARICOM
Statistics
GDP $11.04 billion (2012 est. PPP)
GDP rank 140th (nominal) / 153rd (PPP)
GDP growth
 2.5% (2012 est.)
GDP per capita
 $31,300 (2012 est.)
GDP by sector
 agriculture: 2.1%, industry: 7.1%, services: 90.8% (2012 est.)
2.5% (2012)
Population below poverty line
 9.3% (2004)
Labour force
 184,000 (2009)
Labour force by occupation
 agriculture 5%, industry 5%, tourism 50%, other services 40% (2005 est.)
Unemployment 14.2% (2009 est.)
Main industries
 tourism, banking, cement, oil transshipment, salt, rum, aragonite, pharmaceuticals, spiral-welded steel pipe
121st (2017)[1]
External
Exports $790 million (2012 est.)
Export goods
 mineral products and salt, animal products, rum, chemicals, fruit and vegetables
Main export partners
  United States 24.1%
 Singapore 18.1%
 Colombia 13.4%
 Panama 9.8%
 Taiwan 5.7%
 Malaysia 4.8% (2013 est.)[2]
Imports $2.882 billion (2012 est.)
Import goods
 machinery and transport equipment, manufactures, chemicals, mineral fuels; food and live animals
Main import partners
  United States 29.9%
 Mexico 20.1%
 Singapore 8.7%
 South Korea 6.7%
 China 5.0%
 Venezuela 4.3%
 Canada 4.2% (2013 est.)[3]
Public finances
$342.6 million (2004 est.)
Revenues $1.5 billion (2012)
Expenses $1.8 billion (2012)
Economic aid recipient: $5 million (2004)
BBB+ (Domestic)
BBB+ (Foreign)
A- (T&C Assessment)
(Standard & Poor's)[4]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The Bahamas is the richest country is the entire Caribbean and the third wealthiest country in the Americas. It is a stable, developing nation in the Caribbean with a population of 391,232 (2016) and an economy heavily dependent on tourism and offshore banking. Steady growth in tourism receipts and a boom in construction of new hotels, resorts, and residences had led to solid GDP growth for many years, but the slowdown in the US economy and the attacks of September 11, 2001 held back growth in these sectors in 2001-03. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. However, since December 2000, when the government enacted new regulations on the financial sector, many international businesses have left the Bahamas. Manufacturing and agriculture together contribute approximately 10% of GDP and show little growth, despite government incentives for those sectors. Overall growth prospects in the short run rest heavily on the fortunes of the tourism sector, which depends on growth in the US, the source of more than 80% of the visitors. In addition to tourism and banking, the government supports the development of a "2nd-pillar", e-commerce.

Features of the Bahamian economy

The Bahamian economy is almost entirely dependent on tourism and financial services to generate foreign exchange earnings. The European Union lists the Bahamas as one of several Caribbean "uncooperative jurisdictions" because it fails to meet tax fairness and transparency benchmarks.[5]

Tourism

Tourism alone provides an estimated 45% of the gross domestic product (GDP) and employs about half the Bahamian workforce. In 2016, over 3 million tourists visited the Bahamas, most of whom are from the United States and Canada. [6].

A major contribution to the recent growth in the overall Bahamian economy is Kerzner International's Atlantis Resort and Casino, which took over the former Paradise Island Resort and has provided a much needed boost to the economy. In addition, the opening of Breezes Super Club and Sandals Resort also aided this turnaround. The Bahamian Government also has adopted a proactive approach to courting foreign investors and has conducted major investment missions to the Far East, Europe, Latin America, and Canada. The primary purpose of the trips was to restore the reputation of The Bahamas in these markets.

Offshore financial services

Financial services constitute the second-most important sector of the Bahamian economy, accounting for up to 17% of GDP, due to the country's status as an offshore financial center. As of December 1998, 418 banks and trust companies have been licensed in the Bahamas. The Bahamas promulgated the International Business Companies (IBC) Act in January 1990 to enhance the country's status as a leading financial center. The Act simplified and reduced the cost of incorporating offshore companies in the Bahamas. Within 9 years, more than 84,000 IBC-type companies had been established. In February 1991, the government also legalized the establishment of Asset Protection Trusts in the Bahamas. In December 2000, partly as a response to appearing the plenary FATF Blacklist, the government enacted a legislative package to better regulate the financial sector, including creation of a Financial Intelligence Unit and enforcement of "know-your-customer" rules. Other initiatives include the enactment of the Foundations Act in 2004 and the planned introduction of legislation to regulate Private Trust Companies.

Agriculture

Agriculture and fisheries industry together account for 5% of GDP. The Bahamas exports lobster and some fish but does not raise these items commercially. There is no large scale agriculture, and most agricultural products are consumed domestically. The Bahamas imports more than $250 million in foodstuffs per year, representing about 80% of its food consumption. The government aims to expand food production to reduce imports and generate foreign exchange. It actively seeks foreign investment aimed at increasing agricultural exports, particularly specialty food items. The government officially lists beef and pork production and processing, fruits and nuts, dairy production, winter vegetables, and mariculture (shrimp farming) as the areas in which it wishes to encourage foreign investment.

The Bahamian Government maintains the value of the Bahamian dollar on a par with the U.S. dollar. The Bahamas is a beneficiary of the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), Canada's CARIBCAN program, and the European Union's Lome IV Agreement. Although the Bahamas participates in the political aspects of the Caribbean Community (CARICOM), it has not entered into joint economic initiatives with other Caribbean states.

Industry

The Bahamas has a few notable industrial firms: the Freeport pharmaceutical firm, PharmaChem Technologies (GrandBahama) Ltd. (formerly Syntex); the BORCO oil facility, also in Freeport, which transships oil in the region; the Commonwealth Brewery in Nassau, which produces Heineken, Guinness, and Kalik beers;[7] and Bacardi Corp., which distills rum in Nassau for shipment to the U.S. and European markets. Other industries include sun-dried sea salt in Great Inagua, a wet dock facility in Freeport for repair of cruise ships, and mining of aragonite — a type of limestone with several industrial uses — from the sea floor at Ocean Cay. Other smaller but more nimble players in the banking industry include Fidelity Bank (Bahamas) Ltd. (FBB) and Royal Fidelity Merchant Bank & Trust Limited (RFMBT). FBB offers a wide range of innovative banking products including loan products with built-in savings plans. RFMBT is the only merchant bank in the Bahamas and is a joint venture with Royal Bank of Canada. It provides investment products and services and attracts the majority of the corporate business deals in the Bahamas, most recently acting as financial advisor and placement agent for the largest initial public offering (IPO) ever in the Bahamas with the IPO of Commonwealth Brewery, a Heineken subsidiary.

The Hawksbill Creek Agreement established a duty-free zone in Freeport, The Bahamas' second-largest city, with a nearby industrial park to encourage foreign industrial investment. The Hong Kong-based firm, Hutchison Whampoa, has opened a container port in Freeport. The Bahamian Parliament approved legislation in 1993 that extended most Freeport tax and duty exemptions through 2054.

Taxation

The Bahamas has no income tax, corporate tax, capital gains tax, or wealth tax. Payroll taxes fund social insurance benefits and amount to 3.9% paid by the employee and 5.9% paid by the employer.[8] In 2010, overall tax revenue was 17.2% of GDP.[9] A value-added tax (VAT) of 7.5% has been levied 1 January 2015.

Statistics

The following table shows the main economic indicators in 1980–2017.[10]

Year 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP in $
(PPP)		 2.51 Bln. 3.81 Bln. 4.99 Bln. 5.61 Bln. 7.79 Bln. 9.50 Bln. 10.03 Bln. 10.45 Bln. 10.41 Bln. 10.05 Bln. 10.33 Bln. 10.61 Bln. 11.14 Bln. 11.25 Bln. 11.31 Bln. 11.09 Bln. 11.25 Bln. 11.60 Bln.
GDP per capita in $
(PPP)		 11,877 16,296 19,575 20,103 25,722 29,231 30,512 31,398 30,906 29,501 29,986 30,452 31,618 31,593 31,410 30,435 30,534 31,139
GDP growth
(real)		 7.1 % 4.1 % 1.1 % 4.4 % 5.0 % 3.4 % 2.5 % 1.4 % −2.3 % −4.2 % 1.5 % 0.6 % 3.1 % −0.6 % −1.2 % −3.1 % 0.2 % 1.3 %
Inflation
(in Percent)		 12.2 % 4.6 % 4.6 % 2.0 % 1.7 % 1.8 % 2.0 % 2.4 % 4.4 % 1.7 % 1.6 % 3.1 % 1.9 % 0.4 % 1.2 % 1.9 % −0.3 % 1.4 %
Unemployment rate
(in Percent)		 ... ... 12.0 % 10.9 % 7.0 % 10.2 % 7.6 % 7.9 % 8.7 % 14.2 % 15.1 % 15.9 % 14.4 % 15.8 % 14.6 % 13.4 % 12.2 % 10.1 %
Government debt
(Percentage of GDP)		 ... ... 13 % 21, % 19 % 23 % 23 % 23 % 25 % 30 % 34 % 35 % 38 % 44 % 48 % 51 % 53 % 57 %
  • Household income or consumption by percentage share — highest 10%: 27% (2000)
  • Agriculture - products — citrus, vegetables, poultry
  • Electricity - production — 2,505 GWh (2007 est.) - Rank 133
  • Electricity - consumption — 1,793 GWh (2007) - Rank 133
  • Oil - consumption — 26,830 bbl/d (4,266 m3/d) (2006 est.) - Rank 115
  • Oil - exports — transhipments of 29,000 bbl/d (4,600 m3/d) (2003)
  • Exchange rate — Bahamian dollar is pegged to the US dollar on a one-to-one basis

The Bahamas has the 47th freest economy in the world according to The Heritage Foundation 2010 Index of Economic Freedom. The Bahamas is ranked 7th out of 29 countries in the South and Central America/Caribbean region, and its overall score is higher than the regional and world averages. Total government spending, including consumption and transfer payments, is relatively low. In the most recent year, government spending was 23.4% of GDP.

See also

References

  1. ↑ "Ease of Doing Business in Bahamas, The". Doingbusiness.org. Retrieved 2017-01-23.
  2. ↑ "Export Partners of the Bahamas". CIA World Factbook. 2012. Retrieved 2013-07-26.
  3. ↑ "Import Partners of the Bahamas". CIA World Factbook. 2012. Retrieved 2013-07-26.
  4. ↑ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  5. ↑ "Bahamas, US Virgin Islands And St. Kitts And Nevis Added To EU Blacklist". icij.org. INTERNATIONAL CONSORTIUM OF INVESTIGATIVE JOURNALISTS.
  6. ↑ "Total Arrivals (Air & Sea Landed & Cruise)". Tourism Today Network. 2016. Retrieved 2017-06-01.
  7. ↑ Commonwealth Breweries / Burnshouse website
  8. ↑ "Contributions Table". The National Insurance Board of The Commonwealth of The Bahamas. 2010-05-11. Retrieved 2011-12-22.
  9. ↑ "Bahamas, The". The World Factbook. Central Intelligence Agency. Retrieved 2011-12-22.
  10. ↑ "Report for Selected Countries and Subjects". Retrieved 2018-09-25.
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