The economic outlook for The Bahamas is “quite positive,” despite prospects of war between the United States and Iraq, according to Central Bank of The Bahamas Governor Julian Francis.
He said Tuesday the country has had to cope with financial difficulties over the past three years, one being an OECD blacklisting, so the perception is that the financial services sector might be in a decline, but that’s not the case.
“I would say that more than ever, the country’s financial services broadly, would represent a very strong second industry to our economy and we need to consider very carefully, how we will meet the demands which are going to be necessary if we are going to rise to that opportunity,” Mr. Francis said.
He was a guest on ZNS talk show Focal Point hosted by Picewell Forbes. Also present were Dr. Leon Higgs, president, College of The Bahamas; and Terry Hilts, president, Bahamas Institute of Financial Services, formerly the Bahamas Institute of Bankers.
On the prospects of a Middle East war, Mr. Francis if the war does happen, the country is going to face some months of “fairly difficult developments” in its international economy, the tourism industry in particular.
The economy, he said, is going to be affected in a similar way to the fallout of Sept. 11, but possibly no as severely
He said, however, that Bahamians should prepare for the worst, for a short period.
On the question of the stability of the Bahamas financial services sector, Mr. Francis said it still makes major contributions to the economy.
He acknowledged there have been some reordering and repositioning of the sector, and that the industry is looking at new products, and what sectors of the international financial services industry to target in order to deliver them.
He had no doubt that The Bahamas, “fortuitously” chose to specialise in financial services almost 50 years ago. “That has always been a good choice for us.”
“We have enabled that to develop over the years. I believe that we are better at it today than we ever have been in terms of the resources which we have, largely, thanks to the College of The Bahamas and The Institute of Bankers, and those institutions which have been delivering services, and the focus which the Government is giving to the industry.”
On the domestic front, Mr. Francis painted a mixed picture of significant developments in housing and small business, which suggest Bahamians are investing heavily in those areas said to be critical to the development of the economy, and to the issue of saving and investing.
“But on the other hand, the high levels of consumption in the society, which unfortunately worries me a great deal because I believe it frustrates the longer-term development of our people and our economy,” he said.
He joined Fidelity’s president Greg Bethel in warning Bahamians to be more prudent in their spending, in light of impending events between the U.S. and Iraq.
Urged Mr. Francis: “We have to stop this business of wanting to spend every single penny we earn on consumer things, cars, fancy homes and all of the various trappings, that is what is killing us as a society.”
Mr. Francis said he also believes Bahamians are not sufficiently conscious of the issue, hence his call for public education on the importance of saving.
“We have bought almost entirely the American consumption model and we don’t understand that that is not healthy for our society, our economy and future of The Bahamas. We must be able to persuade our people to postpone consumption, the lavish spending.”
On the implications for the Bahamian society in the wake of reduced work hours, and other international trends, Mr. Francis said Bahamians have to realise that they are competing in a global economy, which is becoming more efficient daily with improved technology.
“The trend is that Bahamians want to devote less time to productivity and more time to leisure,” he said. “This is not the formula that works for a developing country where you devote more time to work, less time for leisure, save more, consume less and invest for the future.
“We have to focus more on the need to work, the need to prepare ourselves well, the need to be able to develop highly skilled services to grab a bigger part of the market in which we are competing,” Mr. Francis said.
By Lindsay Thompson, The Nassau Guardian
