flag Bahamas Bahamas: Economic Outline

Economic Indicators

The Bahamas is the wealthiest Caribbean nation in terms of GDP per capita. The country has a history of positive GDP growth. GDP grew by 14.4% in 2022, supported by a broad-based recovery, especially in tourism activity, returning to its pre-pandemic level. In 2023, the GDP of the Bahamas expanded at a solid 4.3% as tourism showed a particularly robust performance. The medium-term economic outlook appears promising, with a projected real GDP growth of 1.8% in 2024 (IMF). Growth is anticipated to slow down to a range of 1.5% to 2% in the medium term, primarily due to capacity constraints in the tourism sector. Nevertheless, the government foresees long-term growth stimulated by investments aimed at expanding hotel capacity, with numerous FDI projects already in progress.

Improved revenue due to a robust cyclical recovery and reduced pandemic-related expenditures have strengthened the fiscal balance. The fiscal deficit decreased to 3.9% of GDP in 2022/23, with central government debt declining to 84% of GDP. IMF projections indicate a deficit of 2.6% of GDP in 2023/24 and debt reduction to 78% of GDP by 2027/28 under current policies. The financial sector remains strong, characterized by ample liquidity and declining non-performing loans (NPLs). However, private credit growth is subdued and lags behind output expansion. Inflation, reaching its peak in July 2022 at 7.1% year-on-year, was mainly driven by escalating energy and food costs. However, it started to decline thereafter. The inflationary surge was largely influenced by global factors, but a downturn in global energy prices hastened the reduction in inflation, with the rate decreasing to 3.4% by the end of 2023. Inflation is projected to decrease to 3.2% by the end of 2024 and stabilize at around 2.5% over the medium term. The government aims to achieve a fiscal surplus by 2026 through enhanced cost recovery from public corporations and increased spending efficiency, allowing for spending reductions. Tax reforms are anticipated to further bolster the primary surplus in the long run, while additional expenditure on climate resilience is expected to contribute to this surplus. The trade deficit is forecasted to narrow, and international reserves are projected to remain above 4 months of imports. However, the economic outlook faces various downside risks, including potential U.S. slowdown due to monetary tightening, global uncertainty, reduced tourism demand from key markets, global price shocks, and the growing threat of climate-induced natural disasters.

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. The labor market in The Bahamas continues to grapple with challenges, such as the need to restore labor force participation to pre-pandemic levels and tackle the high unemployment rate among young adults. As of May 2023, labor force participation stood at 75.9%, still below the pre-pandemic level of 81%. Moreover, the unemployment rate for individuals aged 25-35 was at 25%, nearly triple the national average. The positive economic performance registered in recent years contributed to a reduction of unemployment, which stood at 8.8% in 2023, the lowest since 2008. 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.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 12.9013.8814.5115.0615.60
GDP (Constant Prices, Annual % Change) 14.44.31.81.61.6
GDP per Capita (USD) 32,29934,37135,54236,50037,426
General Government Gross Debt (in % of GDP) 88.984.283.782.982.3
Inflation Rate (%) n/a3.93.22.52.1
Current Account (billions USD) -1.76-1.32-1.28-1.17-1.09
Current Account (in % of GDP) -13.6-9.5-8.8-7.7-7.0

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

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Bahamian Dollar (BSD) - Average Annual Exchange Rate For 1 GHS 0.250.230.220.190.18

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) 3.2 11.7 85.1
Value Added (in % of GDP) 0.6 8.2 79.4
Value Added (Annual % Change) 29.7 10.2 9.0

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2024 (e)2025 (e)2026 (e)
Unemployment Rate (%) 8.88.99.0

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
Official tourism website of Bahamas
Useful Resources
Ministry of Finance
Ministry of Foreign Affairs
Ministry of Economic Affairs
Ministry of Agriculture and Marine Resources
Central Bank of The Bahamas
 
 

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Latest Update: May 2024