Mr. Smith made this statement on Tuesday while addressing the 13th annual Bahamas Business Outlook seminar at the Radisson Cable Beach Resort.
Minister Smith also said the country can expect expanded opportunities for growth and employment in 2004.
He pointed out, however, that those projections are dependent upon the completion of a number of major foreign direct investment projects, which are currently in various stages of implementation.
Recounting that one year ago the country faced the prospect of declining tourism business as a possible consequence of war between the United States and Iraq, Minister Smith said that total visitor arrivals increased by 3.7 percent in 2003 over the previous year’s level.
According to the Minister the trend could continue in 2004.
“We could expect more gains to our tourism sector in the near future if the trade and current account deficits in the US continue to worsen,” Minister Smith said.
He continued, “Large US deficits would mean a weaker US dollar and The Bahamas and other parts of the Caribbean would be more attractive than Europe or Asia for US vacationers. Given the recent turnaround in the US economy, which should result in an increase in the disposable income by US travelers, there are reasons for optimism in the outlook for our tourism industry in 2004.”
Despite stating that the country could look forward to “healthy increases” in both stopover and cruise passengers, Minister Smith warned that any natural disaster or act of terror could have a significant negative impact on the economy and negate the positive economic projections.
Continuing the review of last year’s economic performance, he pointed out that at the end of November 2003 the external reserves stood at approximately $506.9 million compared with $357.7 million at the same point the year before.
Noting that the budget deficit declined to $39 million for the first three months of fiscal year 2003/2004 compared to $76 million for the same period in 2002/2003, Minister Smith attributed the improvement to what he called the government’s “continued monetary and fiscal restraints”.
Turning to the balance of payments statistics, which summarise trade and investment transactions between The Bahamas and the rest of the world, Minister Smith said that deficit increased “moderately” by 8 percent in the third quarter of 2003 from $21.2 million to $28.2 million.
He pointed out, however, that The Bahamas has always been a net importer of goods and services due to its low level of local production.
Minister Smith further pointed out that although the net private direct investment slowed to $23.6 million during the third quarter of 2003 from $30.4 million in the previous year, direct equity inflows increased to $22.1 million from $16.8 million for the same period.
“The sum total of those statistics, which I just cited, means simply that the local economy has stabilised over the past year, moderate growth has occurred and we may be on a path of sustainable economic development,” Minister Smith said.
“This optimism is supported by the turnaround in the US economy and the continued low inflation rate of about 2.5 percent in The Bahamas,” he added.
Addressing recent developments in the financial services sector, Minister Smith reported on plans to help revitalise the financial services sector.
Recounting that the package of legislation passed in December 2000 to remove The Bahamas from the Financial Action Task Force’s blacklist resulted in a slowdown in the financial services sector, Minister Smith acknowledged that the new laws have provided more transparency and accountability in the jurisdiction’s financial industry.
“The sector has repositioned itself to compete effectively in the new environment of expanded regulatory and supervisory standards,” Minister Smith said.
“In the near future, it is expected that (a) new series of products and services would be offered by the sector. New legislation for the establishment of foundations, special trusts, protected cells among other things should be introduced into Parliament over the next few months,” he added.
Minister Smith expressed confidence that those developments would assist the vital sector in “(resuming) growth on an upward path and (continuing) to provide high-level job opportunities for qualified Bahamians
Darrin Culmer, The Bahama Journal
