By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Central Bank’s governor yesterday said “subdued” tourism growth meant the Bahamian economy expanded at a “slightly moderated speed” during the 2025 first half.

Unveiling The Bahamas’ economic performance for the 2025 second quarter, John Rolle revealed that despite the “increased headwinds” due to global uncertainty this nation is still on track to hit its full-year growth forecast of around 1.8 percent.

He explained that “uncertainty” due to the Trump administration’s tariffs and global trade disputes is expected to slow tourism, while rising global inflation would delay a reduction in international interest rates making The Bahamas’ foreign currency debt more costly to service.

“As we observed from earlier in the year, there are still increased headwinds facing the economy, but these do not extinguish the growth forecast. Uncertainties from increased tariffs on global trade are expected to slow global growth below what would have otherwise been its potential, and this will be, or this will continue to be, a drag on tourism,” said Mr Rolle.

“Any escalation of trade tensions would add to the economic strain of the ongoing wars in the Middle East and Europe. In the meantime, tariffs, supply chains, disruption and the potential diversion of trade are collectively channels for increased inflation, which could postpone any anticipated further reduction in international interest rates.

“And this would keep both public and private sector debt costlier than it would otherwise have been, and it would constrain the ease of funding for foreign direct investment on which our economy depends heavily.”

Mr Rolle said the Bahamian economy is expected to grow at a slower pace this year mainly due to a reduction in US stopover visitors, but added that the impact was somewhat mitigated by higher room rates.

“As to tourism, the continued gains reflected a combination of a subdued expansion in stopover receipts compared to a steady and healthy increase in cruise visitor earnings in the stopover segment, where the bulk of the industry’s receipts were recorded. Inflows were boosted because of higher average pricing, despite a slightly reduced number of visitors,” said Mr Rolle.

“The vacation rental segment contributed, notably with an expanded listing of properties supporting a nearly 10 percent increase in average room sales, and further appreciation and average nightly room rates occurring alongside the room sales increase challenges. Overall, though, it reflected constrained hotel room inventory and increased uncertainty in the US markets, which accounts for the majority of the visitors.”

Mr Rolle said future bookings indicate the 2025 second half will see more tourism earnings than last year, but this will be due to an increase in room rates not occupancy.

“The Central Bank analysis of online travel sites, and forward-looking bookings and pricing data, forecast better sector revenues over the remainder of this year as compared to the second half of last year. And the results last year were impacted by greater uncertainties around the potential outcome in the US presidential elections, as well as disruptions from a relatively busy start to the 2024 hurricane season,” said Mr Rolle.

“So those factors are not present or, in terms of gauging the consumer sentiments going into the second half of the year, nevertheless the forecast of improved earnings really focuses only on the likely improvement in average room rates in the sector, without any forecasting uptick in occupancy compared to the same period in 2024.”

Mr Rolle also revealed that external reserves were 2 percent lower than the same period in 2024, which had stronger tourism growth and benefited from external fiscal borrowing.

“The Central Bank made a net sale of foreign currency to the Government and public enterprises over this period, as opposed to a net purchase of foreign exchange from these entities last year. So, correspondingly, we noted that the seasonal growth and external reserves over the first half of the year was more than one-third lower than in the first half of 2024,” said Mr Rolle.

“As we neared the end of July 2025, external reserves were estimated at $2.95bn, which was almost about 2 percent lower than at the same point in 2024 when the outcome had benefited from comparatively healthier tourism growth and some net inflows received from the Government’s external borrowing activities.”