Bahamas domestic economy projected to expand at a steady pace this year

NASSAU, Bahamas (CMC) – The Central Bank of The Bahamas (CBB) says the domestic economy is projected to expand at a steady pace in 2026, relative to last year, as key indicators move closer to their medium-term growth potential. It said tourism, a primary driver of economic growth, is expected to remain robust, supported by stronger high-value added stopover performance and healthy growth in the cruise sector. In addition, new and ongoing investment projects are anticipated to provide further impetus to construction activity and employment.

In its Monthly Economic and Financial Developments July 2026, the CBB said that inflationary pressures and heightened geopolitical risks have become more prominent, particularly due to higher fuel and import costs. “From a fiscal perspective, the government’s net financing gap is expected to narrow as the domestic economy expands. Improvements in fiscal performance remain linked to increases in tourism-related taxable activities and to the anticipated minimum corporate tax.

“Moreover, financing requirements are anticipated to be met through a combination of domestic and external borrowing, with domestic sources accounting for the larger share. Within the monetary sector, banking sector liquidity is projected to remain elevated, although continued growth in private sector credit could result in a modest reduction.” The CBB said that external reserves are forecasted to remain broadly in line with 2025 levels, remaining well above international benchmarks and providing sufficient support for the Bahamian dollar currency peg. It said despite a favourable outlook, downside risks persist amid uncertain externalities.

In particular, stopover demand from the United States remains vulnerable to ongoing tensions in Eastern Europe, the escalated conflict in the Middle East, and continued global tariff policy uncertainty. “Moreover, elevated energy prices could further weigh on near-term travel demand, drive cost-push inflation, increase financing costs for foreign direct investment, and delay reductions in the government’s interest costs,” the CBB noted. It said during the month of July, the domestic economy expanded at a stable pace, vis-à-vis the corresponding 2025 period and that while key indicators continued to trend towards their medium-term potential, tourism output gains strengthened, as earnings growth indicators for the h…