BY NEIL HARTNELL
TRIBUNE Business Editor
nhartnell@tribunemedia.net
A BAHAMIAN economist is urging policymakers to focus on the International Monetary Fund (IMF) prediction that economic growth will revert to its “anemic” long-term trend as early as 2027, while asserting: “We should be aiming for at least 3 percent”.
Rupert Pinder, associate professor of economics at the University of The Bahamas (UoB), told Tribune Business that the Fund’s forecast that this nation’s annual economic growth will slip to 1.9 percent next year, and then further to 1.8 percent in 2028, are what the Government must “pay attention” to rather than one-off spikes or dips.
Speaking after the IMF unveiled its October 2026 world economic outlook, in which it cut The Bahamas’ projected economic growth for 2026 from 2.8 percent to 2.5 percent, he added that this trimming was not surprising given the cost of living pressures imposed on both Bahamians and tourists from global oil and fuel price shocks feeding into the supply chain.
The Fund also predicted that The Bahamas will this year suffer the highest rate of annual inflation in the tourism-dependent Caribbean at 5.2 percent, with only Jamaica higher at 5.4 percent. The Bahamian inflation rate is thus forecast to more than double from the 2.3 percent sustained in 2025, although it is predicted to moderate to 3.2 percent in 2027 before falling again to 2.2 percent in 2028.
Mr Pinder, too, argued that the inflation hike and cost of living pressures come as little surprise given The Bahamas’ status as an import-dependent nation with little domestic production capacity of its own, which forces it to bring in virtually all it consumes. This makes The Bahamas especially vulnerable to economic shocks including imported inflation.
“To the extent to which we see the kind of unrest in the Middle East and knock-on effects, oil prices feed into everything in the transportation of goods and services, and we are a very tourism-dependent economy,” Mr Pinder explained. “Fuel prices affect transportation costs including the movement of people. It has an effect on everything.
“This trimming of the growth rate has a lot to do with the dampening of consumer demand because of inflation pressures. That affects aggregate demand, and we see a slowing down in the overall growth rate. I’m not surprised in the revision to the overall outlook and the inflation outlook.”
Mr Pinder added that Bahamian tourism, in common with the same sector in many other Caribbean nations, is “import dependent, and to the extent it’s import dependent, we have a lot by way of imported inflation. With what’s going on in the global economy it’s not surprising to see these things playing out in terms of inflation’s impact”.
However, he quickly added: “While these revisions for growth rates and inflation rate a watching brief, what’s more important for me is the longer-term growth prospects are at 1.9 percent and trending towards 1.8 percent. The IMF’s long-term growth rate is not materially different from what they’ve found before.
“But, from the policy standpoint, that’s the number we have to watch and really pay more attention to. It’s not the one-off growth rates; having strong growth at 2.5 percent and above. The growth is with respect to long-term growth, which speaks to systemic sorts of issues.
“That is the one that requires a lot of attention; it’s not the strong growth rates in one year versus another but how we are trending in our long-term prospects.”
Asked what The Bahamas should be targeting as a sustained annual gross domestic product (GDP) growth rate, Mr Pinder replied: “In my view I think a healthy growth rate, particularly on a sustainable basis, we should be aiming for at least 3 percent; in that territory. I’ve always said that 3 percent is at the lower end.”
To achieve this, Mr Pinder said The Bahamas needs to concentrate on unlocking Family Island development potential and creating an “integrated” tourism models that better links other local sectors with the country’s largest industry.
“When we consider there is still a lot of development potential in the country, we still have the capacity for strong growth,” he told Tribune Business. “The tourism sector is still very much under-exploited when it comes to development in the Family Islands and there being linkages; the inter-industry linkages that are going to create a more value-added proposition.
“For example, let’s say smaller resorts build ownership and an integrated form of development. When it comes to tourism development, we have the enclaves of large destination resorts, but integrated resorts are found to be more efficient earners of foreign exchange with local ownership, local participation and local sources of material.
“It deepens inter-industry linkages and, at the same time, reduces foreign exchange leakages on imports. We have a lot of pent-up opportunities in that area with respect to the Family Islands. That’s the premise which I stand on when I say we can experience strong longer-term growth rates rather than an anemic 1.8 percent to 1.9 percent.”