Economy fears: Bahamas ranked world's sixth most expensive state

Wednesday, February 5, 2020

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ ranking as the world’s sixth most expensive nation to live in highlights “a fundamental challenge related to the country’s economic viability”, it was argued last night.

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, said the findings by CEOWORLD magazine exposed the “tremendous” burden imposed on lower income Bahamians by the ever-increasing cost of living and growing “wealth disparity” between rich and poor.

He told Tribune Business that many households and small businesses were “struggling to manage” in this environment, and having to be “super stringent with their money” to make ends meet, thereby acting as a further drag on economic growth.

The ORG executive spoke out after the magazine’s survey ranked The Bahamas behind just Switzerland, the world leader, and Norway, Iceland, Japan and Denmark, making it the world’s sixth most expensive country to live in and the highest-cost destination in the Western Hemisphere.

The survey, which uses New York as the baseline benchmark to compare all countries to, based its assessment on five metrics including the cost of living; rent; groceries; eating out; and purchasing power.

To assess these metrics, the magazine looked at consumer prices indexes and cost of living studies from 132 nations, as well as publicly-available data that measured every-day costs such as accommodation; clothing; taxi fares; utility; internet; the price of groceries; transport; and eating out.

The Bahamas scored a combined 82.51 points in its “cost of living” rankings, rating especially highly on restaurant costs at 83.66 - a result that may have been aided by the inclusion of the automatic 15 percent gratuity. It also achieved a 62.65 score in the groceries cost index.

While rent costs in The Bahamas received a relatively low score of 36.36, this jumped to 60.43 when added to the magazine’s cost of living index. And it scored just 54.18 for “local purchasing power, the third lowest mark among the 20 most expensive countries. This indicates that many Bahamians are struggling to keep up with rising living costs.

The survey’s findings will come as little surprise to many observers given that The Bahamas has long been known as, and perceived as, an expensive destination due in large part to its import dependency and regressive taxation system that focuses primarily on taxing the cost of living through VAT and import tariffs/Excise Tax.

Mr Aubry, recalling a previous survey that described The Bahamas as 40 percent more expensive than the average US city, said of the latest findings: “I think that’s a fundamental challenge related to the economic viability of The Bahamas.

“The cost of living is tremendously challenging in an environment where we see a growing expanse between those that have and those that do not in terms of wealth disparity. It particularly affects those on the bottom scale of that. What we’ve seen is the every day Bahamian struggling to manage in this condition, and that’s challenging from a growth perspective.

“The type of financial behaviours required from every-day citizens and small businesses are that they have to be super-stringent in how they manage their money.”

Mr Aubry said high living costs frequently meant small businesses required extra capital to purchase essential goods and services, forcing them to take on and maintain higher levels of risk than they would otherwise.

He added that the current system typically provides “more opportunity” to those with existing wealth than those without it, with a more productive workforce also being key to reducing living costs.

Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that the survey’s findings highlighted the competitiveness issues high cost bases cause for destinations such as The Bahamas.

Yet while this meant the country was “non-competitive on price” with Caribbean rivals, he added that it had helped focus The Bahamas on the high-end clients that form its core tourism and financial services business.

“The implications are obviously not helpful,” Sir Franklyn said of the survey findings, “to the extent that we have got to be competitive in a global marketplace. The fact of the matter is there are a lot of people in the world who cannot afford to be going to a place that’s ranked the sixth most expensive in the world.”

He added, though, that there were “two sides to the story” as The Bahamas’ high living costs had positioned it at the ultra-luxury segment of the resort market with products such as Atlantis, Baha Mar, Albany and Baker’s Bay. “It’s not just about moaning, groaning and critiquing it,” Sir Franklyn said.

Still, he acknowledged that the survey findings pointed to the growing gap between rich and poor in The Bahamas. “I can tell you from being in the housing business that the percentage of the population that can afford to buy a house is shrinking,” Sir Franklyn told Tribune Business. “There may be a number of reasons for that, but there are some real issues. That’s the way it is.”

Comments

Clamshell says...

Well, if the Bahama$ is gonna be among the world’s leaders in somethin’, too bad it’s this one. We should all save a ton of money and just move to France!

Posted 5 February 2020, 4:09 p.m. Suggest removal

BahamaPundit says...

The Bahamas is ranked 6th most expensive country in the world but ranked "least" corrupt country in the Caribbean. One of these reports must be wrong. Let's see: the Bahamas has completely derelict roads, schools, electricity, crime, transportation, transparency, medical, housing etc. while the other countries on the list of most expensive have near perfect infrastructure, safety etc. I think it's safe to say that the main reason the Bahamas is so expensive is CORRUPTION and the list saying it is least corrupt is completely wrong and or just another fruit of corruption.

Posted 5 February 2020, 4:49 p.m. Suggest removal

birdiestrachan says...

When the FNM Government increased VAT it hurt the poor. add the extra charges on power
bills. now the poor have to provide their own bags when they go to the stores. The burdens add
up.

The FNM Government does not care about the poor. Now they are pretending to care
about those in prison.

Fact are facts and no lies can change the facts,

Posted 5 February 2020, 5:05 p.m. Suggest removal

... and a fact you conveniently skipped is the fact that VAT was first initiated by the PLP.

Yes, Birdie, facts are facts and no lie can change the facts.

Posted 5 February 2020, 5:20 p.m. Suggest removal

ThisIsOurs says...

also you rationalized that 7.5% VAT would help you and your children lose weight since you'd have to buy less food. 12% VAT should have made your weight loss goals even more achievable

Posted 5 February 2020, 6:58 p.m. Suggest removal

The point is the FNM Government roc wit doc said VAT was bad. Go and read what they said
about VAT

The minute they became the Government they increased VAT 60% The spy bill was bad
they made it even worse than what they had complained about then passed it..

BAH MAR was a fake . then grin and cut the ribbon.

Yes indeed facts are FACTS. do your best to keep up.

Posted 5 February 2020, 5:28 p.m. Suggest removal

Do your best to read what you’ve written before you post, to see if it makes sense or reads like gibberish.

Posted 5 February 2020, 5:35 p.m. Suggest removal

sheeprunner12 says...

I think Bahama Pundit hit the nail on the head ………… unproductivity, corruption and kickbacks make this country expensive for both foreigners and natives …….. How can a Third World micro-country like The Bahamas be on a list with elite First World countries???? ……. most Bahamians make less than $20,000 a year salary, so you can imagine how difficult it must be for the "average" Bahamian ………. its stifling, frustrating, and tempting to commit crimes and misdemeanours.

Posted 5 February 2020, 5:56 p.m. Suggest removal

Well_mudda_take_sic says...

Suggest you go rob Snake who has been robbing Bahamians and foreign investors for decades.

Posted 5 February 2020, 6:18 p.m. Suggest removal

SP says...

Blah, blah, blah, blah, blah. How the hell can we even begin to justify being the 6th most expensive place to live on earth, when we are just 40 miles off the U.S. mainland?

HOW and WHY do prices increase 400% between Florida and the local retail markets?

Obviously, import dependency is not an acceptable excuse as Bermuda, Cayman, Turks and any number of other Island destinations much further away have a markedly lower cost of living!

Until we finally wake up and decide to unshackle ourselves from the sunshine boys and bay street boys, who both get a percentage of **EVERYTHING ENTERING THE COUNTRY** we will continue being ridden like donkeys by these pirates.

The PLP and FNM hierarchy are equally responsible for where we are today. We must find the where it all to untether our country and people away from these pirates.

We desperately need a third and preferably fourth political party option to chose from.

Posted 5 February 2020, 6:28 p.m. Suggest removal

bogart says...

SP go to the head of the class. Duties just compare items on internet and price of items retailed here. Simple all the duties applied to keep the two political Syndicates going and jewel in their crown the govt workforce happy and entire populace bearing the burden.

Posted 5 February 2020, 7:20 p.m. Suggest removal

@SP On the third or fourth Party, there are the 2 female party heads, one leading the DNA and other the Constitution Party with Ali McIntosh. Another already formed party is a Kingdom Party. It is likely the existing party Christian Party will do a return and there will be other formations to emerge to protect shared interests.

Posted 5 February 2020, 8:26 p.m. Suggest removal

Yep. We need to get rid of the middlemen. 45 minutes away from the USA and every product hugely marked up. This isn't an effective way to run a country.

Posted 5 February 2020, 8:52 p.m. Suggest removal

professionalbahamian says...

SP sounds right on this one- and facts rule

Bulk inbound shipping is basically a monopoly (ORG should publish a little study on who owns what and what the shipping cost or options are to bring a container in, insurance companies are basically a monopoly (try to find a home/other insurer where you can get optional pricing that might lower your premium significantly and who are they underwritten by), inbound fuel is taxed heavily (shouldn't it be public knowledge what percentage of the cost of a gallon of fuel/ gasoline goes to the special private group/s (25%?), what amount goes to government(25%) (for road repair ETC lol?) - so that would bring fuel down to what $2.30 per gallon and power down to? Per KWH?. Ask the hotel industry what impact the all inclusive hotels have on the economy - "anyone ever heard a tourist on the plane leaving say - "oh we had a great time - didn't even need to leave the hotel property since everything was included (m l ?a)" - some won't even let tour operators use their driveway if they don't use tour agents on property (s n ?d l s)." Cruise ship passengers also - ?
Not to talk about food wholesalers or retailers - but you get the idea
Automatic gratuity at restaurants - absolutely nuts - how will one see improvement in service or attitude with that?

Of course what came first - our inability to offer hotel rooms or the all inclusive debacle- and where did the money go back in the day anyways right?

Capitalism at work without support for competition - wow

Also remember whe Australia said VAT should be across the board -no exceptions - why not publish which resorts or others don't have to pay VAT or import duties and why?

With all due respect Mr. AG, Mr.PM, Mr DPM, and related oversight committees, don't your children also have to live their lives here, enter the work force, buy food, rent a place to live, in the hopes of a life? You have to actively chip away at these old bad decisions.

Posted 6 February 2020, 7:08 a.m. Suggest removal

Spot on!

Posted 6 February 2020, 9:42 a.m. Suggest removal