However, the fund has cut its projected growth forecast for 2022

The International Monetary Fund (IMF) has revealed that The Bahamas exceeded its economic growth projections for 2021.

In fact, the Caribbean country more than doubled the projected gross domestic product (GDP) growth with actual economic output expanding by 5.5 per cent relative to the forecasted two per cent. The faster-than-anticipated GDP growth of the Bahamian economy comes amid the COVID-19 pandemic, coupled with the impact of soaring global inflation.

However, uncertainties caused by Russia’s invasion of Ukraine have resulted in the IMF reducing its 2022 economic growth forecast by two percentage points from eight per cent down to six per cent, but economic growth estimates for 2023 have been maintained at 4.1 per cent. The Bahamas’ tourism-dependent economy was hit hard by the COVID-19 pandemic, which came on the heels of the devastation caused by Hurricane Dorian.

While the economy is recovering strongly, the pandemic has exacted a tragic human and social toll and caused a significant weakening in public finances. Coupled with an increase in construction activity, the country’s economic output is estimated to have expanded by around 5.5 per cent last year.

Real GDP projection for 2022

Real GDP growth is estimated at around six per cent this year, although a full recovery to pre-pandemic levels is not expected before the end of 2023. Furthermore, inflationary pressures are building in line with global developments and are expected to ease only gradually.

The IMF reports that risks to the outlook are however significant, pointing out that a re-intensification of the pandemic cannot be discarded.

With about 40 per cent of the population fully vaccinated, the emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions, the IMF has assessed.

Alternatively, rising cases in source countries could dissuade travel and lead to a renewed decline in tourism.

According to the IMF, higher food and oil prices, because of the effects of the war in Ukraine, could erode consumer demand and impose a particularly heavy burden on the vulnerable.