Economy of the Bahamas

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Economy of The Bahamas

Nassau is the capital and financial center of The Bahamas

Currency Bahamian dollar (BSD)

Fiscal year 1 July - 30 June

Trade WTO, CARICOM
organisations

Statistics

 $12.425 billion (nominal, 2018)[1]

GDP
 $12.357 billion (PPP, 2018)[1]

GDP rank 140th (nominal) / 153rd (PPP)

GDP growth 0.4% (2016) 0.1% (2017)

1.6% (2018) 0.9% (2019e)[1]

GDP per  $32,997 (nominal, 2018)[1]
capita
 $32,817 (PPP, 2018)[1]
GDP by agriculture: 2.1%, industry: 7.1%, services: 90.8% (2012 est.)
sector
Inflation (CP 3.64% (March 2022)[1]
I)
Population 9.3% (2004)
below povert
y line
Human  0.805 very high (2018)[2] (60th)
Development
N/A IHDI (2018)[3]
Index
Labour force 184,000 (2009)

Labour force agriculture 5%, industry 5%, tourism 50%, other services 40% (2005
by
est.)
occupation

Unemployme 14.2% (2009 est.)

nt
Main tourism, banking, cement, oil transshipment, salt, rum, aragonite, phar
industries
maceuticals, spiral-welded steel pipe
Ease-of-  119th (medium, 2020)[4]
doing-
business rank

External

Exports $543,424 million (2021 est.)[5]

Export goods mineral products and salt, animal products, rum, chemicals, fruit and

vegetables
Main export  United States 41%
partners
 Poland 22%

 Nicaragua 6%

 India 3%

 Barbados 3%

Other 25% (2017 est.)[6]

Imports $3.48 billion (2021 est.)

Import goods machinery and transport equipment, manufactures, chemicals, mineral

fuels; food and live animals

Main import  United States 29.9%
partners
 Mexico 20.1%

 Singapore 8.7%

 South Korea 6.7%

 China 5.0%
  Venezuela 4.3%
 Canada 4.2% (2013 est.)[7]

Public finances
Public debt $342.6 million (2004 est.)

Revenues $2,804.4 billion (2022/2023)

Expenses $2,731.7 billion (2022/2023)

Economic aid recipient: $5 million (2004)

Credit rating BBB+ (Domestic)

BBB+ (Foreign)

A- (T&C Assessment)

(Standard & Poor's)[8]

Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of The Bahamas is dependent upon tourism and offshore banking. The

Bahamas is the richest country in the Caribbean and is ranked 14th in North America for
nominal GDP.[9] It is a stable, developing nation in the Lucayan Archipelago, with a
population of 391,232 (2016). Steady growth in tourism receipts and a boom in
construction of new hotels, resorts, and residences had led to solid GDP growth for
many years. The slowdown in the Economy of the United States and the September 11
attacks held back growth in these sectors from 2001 to 2003.
Financial services constitute the second-most important sector of the Bahamian
economy, accounting for about 15% of GDP. However, since December 2000, when the
government enacted new regulations on the financial sector, many international
businesses have left the Bahamas. Manufacturing and agriculture together contribute
approximately 10% of GDP and show little growth, despite government incentives for
those sectors. Overall growth prospects in the short run rest heavily on the fortunes of
the tourism sector, which depends on growth in the United States, the source of more
than 80% of the visitors. In addition to tourism and banking, the government supports
the development of a "2nd-pillar", e-commerce.

Contents

 1Features of the Bahamian economy

o 1.1Tourism
o 1.2Offshore financial services
o 1.3Agriculture
o 1.4Trade
o 1.5Industry
 2Taxation
 3Statistics
 4See also
 5References
 6External links

Features of the Bahamian economy[edit]

The Bahamian economy is almost entirely dependent on tourism and financial services
to generate foreign exchange earnings. The Gross Domestic Product (GDP) of The
Bahamas is approximately $5.7 billion with tourism accounting for 80%, financial
services nearly 20% and the balance spread among retail and wholesale trade, fishing,
light manufacturing and agriculture.[10] The European Union lists the Bahamas as one of
several Caribbean "uncooperative jurisdictions" because it fails to meet tax fairness and
transparency benchmarks.[11]
Tourism[edit]
Tourism alone provides an estimated 51% of the gross domestic product (GDP) and
employs about half the Bahamian workforce. In 2016, over 3 million tourists visited the
Bahamas, most of whom are from the United States and Canada.[12]
A major contribution to the recent growth in the overall Bahamian economy is Kerzner
International's Atlantis Resort and Casino, which took over the former Paradise Island
Resort and has provided a much needed boost to the economy. In addition, the opening
of Breezes Super Club and Sandals Resort also aided this turnaround. The Bahamian
Government also has adopted a proactive approach to courting foreign investors and
has conducted major investment missions to the Far East, Europe, Latin America,
and Canada. The primary purpose of the trips was to restore the reputation of the
Bahamas in these markets.
Offshore financial services[edit]
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Financial services constitute the second-most important sector of the Bahamian

economy, accounting for up to 17% of GDP, due to the country's status as an offshore
financial center. As of December 1998, 418 banks and trust companies have been
licensed in the Bahamas. The Bahamas promulgated the International Business
Companies (IBC) Act in January 1990 to enhance the country's status as a leading
financial center. The Act simplified and reduced the cost of incorporating offshore
companies in the Bahamas. Within 9 years, more than 100,000 IBC-type companies
had been established. In February 1991, the government also legalized the
establishment of Asset Protection Trusts in the Bahamas. In December 2000, partly as
a response to appearing the plenary FATF Blacklist, the government enacted a
legislative package to better regulate the financial sector, including creation of a
Financial Intelligence Unit and enforcement of "know-your-customer" rules. Other
initiatives include the enactment of the Foundations Act in 2004 and the planned
introduction of legislation to regulate Private Trust Companies. After being later off the
blacklist,[13] in December 2020 Bahamas also was taken off[14] the FATF greylist.
Agriculture[edit]
See also: Agriculture in the Bahamas
See also: Bahamian cuisine
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Agriculture and fisheries industry together account for 5% of GDP. The Bahamas

exports lobster and some fish but does not raise these items commercially. There is no
large scale agriculture, and most agricultural products are consumed domestically. The
Bahamas imports more than $250 million in foodstuffs per year, representing about 80%
of its food consumption. The government aims to expand food production to reduce
imports and generate foreign exchange. It actively seeks foreign investment aimed at
increasing agricultural exports, particularly specialty food items. The government
officially lists beef and pork production and processing, fruits and nuts, dairy production,
winter vegetables, and mariculture (shrimp farming) as the areas in which it wishes to
encourage foreign investment.
Trade[edit]
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The Bahamian Government maintains the value of the Bahamian dollar on a par with
the U.S. dollar. The Bahamas is a beneficiary of the U.S.-Caribbean Basin Trade
Partnership Act (CBTPA), Canada's CARIBCAN program, and the European Union's
Lome IV Agreement. Although the Bahamas participates in the political aspects of
the Caribbean Community (CARICOM), it has not entered into joint economic initiatives
with other Caribbean states.
Industry[edit]
The Bahamas has a few notable industrial firms: the Freeport pharmaceutical firm,
PharmaChem Technologies (GrandBahama) Ltd. (formerly Syntex); the BORCO oil
facility, also in Freeport, which transships oil in the region; the Commonwealth
Brewery in Nassau, which produces Heineken, Guinness, and Kalik beers;
[15]
 and Bacardi Corp., which distills rum in Nassau for shipment to the U.S. and
European markets. Other industries include sun-dried sea salt in Great Inagua, a wet
dock facility in Freeport for repair of cruise ships, and mining of aragonite—a type of
limestone with several industrial uses—from the sea floor at Ocean Cay. Other smaller
but more nimble players in the banking industry include Fidelity Bank (Bahamas) Ltd.
(FBB) and Royal Fidelity Merchant Bank & Trust Limited (RFMBT). FBB offers a wide
range of innovative banking products including loan products with built-in savings plans.
RFMBT is the only merchant bank in the Bahamas and is a joint venture with Royal
Bank of Canada. It provides investment products and services and attracts the majority
of the corporate business deals in the Bahamas, most recently acting as financial
advisor and placement agent for the largest initial public offering (IPO) ever in the
Bahamas with the IPO of Commonwealth Brewery, a Heineken subsidiary.
The Hawksbill Creek Agreement established a duty-free zone in Freeport, the Bahamas'
second-largest city, with a nearby industrial park to encourage foreign industrial
investment. The Hong Kong-based firm, Hutchison Whampoa, has opened a container
port in Freeport. The Bahamian Parliament approved legislation in 1993 that extended
most Freeport tax and duty exemptions through 2054.

Taxation[edit]
Further information: Taxation in the Bahamas
The Bahamas has no income tax, corporate tax, capital gains tax, or wealth tax. Payroll
taxes fund social insurance benefits and amount to 3.9% paid by the employee and
5.9% paid by the employer.[16] In 2010, overall tax revenue was 17.2% of GDP.
[17]
 A value-added tax (VAT) of 7.5% has been levied 1 January 2015. It then increased
from 7.5% to 12% effective from 1 July 2018.[18]

Statistics[edit]
The following table shows the main economic indicators in 1980–2017. [19]

19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Year
80 85 90 95 00 05 06 07 08 09 10 11 12 13 14 15 16 17

2.5 3.8 4.9 5.6 7.7 9.5 10. 10. 10. 10. 10. 10. 11. 11. 11. 11. 11. 11.
GDP in 1 1 9 1 9 0 03 45 41 05 33 61 14 25 31 09 25 60
$ Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl Bl
(PPP)
n. n. n. n. n. n. n. n. n. n. n. n. n. n. n. n. n. n.

GDP
per 11, 16, 19, 20, 25, 29, 30, 31, 30, 29, 29, 30, 31, 31, 31, 30, 30, 31,
capita 87 29 57 10 72 23 51 39 90 50 98 45 61 59 41 43 53 13
in $ 7 6 5 3 2 1 2 8 6 1 6 2 8 3 0 5 4 9
(PPP)

GDP −2. −4. −0. −1. −3.

7.1  4.1  1.1  4.4  5.0  3.4  2.5  1.4  1.5  0.6  3.1  0.2  1.3 
growth 3  2  6  2  1 
% % % % % % % % % % % % %
(real) % % % % %

Inflatio 12. −0.

n 4.6  4.6  2.0  1.7  1.8  2.0  2.4  4.4  1.7  1.6  3.1  1.9  0.4  1.2  1.9  1.4 
2  3 
(in % % % % % % % % % % % % % % % %
Percent)
% %
Unemp
loymen 12. 10. 10. 14. 15. 15. 14. 15. 14. 13. 12. 10.
7.0  7.6  7.9  8.7 
t rate ... ... 0  9  2  2  1  9  4  8  6  4  2  1 
% % % %
(in % % % % % % % % % % % %
Percent)

Govern
ment
debt 13  21,  19  23  23  23  25  30  34  35  38  44  48  51  53  57 
... ...
(Percent % % % % % % % % % % % % % % % %
age of
GDP)

 Household income or consumption by percentage share—highest 10%: 27% (2000)

 Agriculture - products—citrus, vegetables, poultry
 Electricity - production—2,505 GWh (2007 est.) - Rank 133
 Electricity - consumption—1,793 GWh (2007) - Rank 133
 Oil - consumption—26,830 bbl/d (4,266 m3/d) (2006 est.) - Rank 115
 Oil - exports—transhipments of 29,000 bbl/d (4,600 m3/d) (2003)
 Exchange rate—Bahamian dollar is pegged to the U.S. dollar on a one-to-one basis
The Bahamas has the 47th freest economy in the world according to The Heritage
Foundation 2010 Index of Economic Freedom. The Bahamas is ranked 7th out of 29
countries in the South and Central America/Caribbean region, and its overall score is
higher than the regional and world averages. Total government spending, including
consumption and transfer payments, is relatively low. In the most recent year,
[when?]
 government spending was 23.4% of GDP.

See also[edit]
 List of Commonwealth of Nations countries by GDP
 List of Latin American and Caribbean countries by GDP growth
 List of Latin American and Caribbean countries by GDP (nominal)
 List of Latin American and Caribbean countries by GDP (PPP)