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Tourism continues to be the mainstay of the Bahamian economy and accounts for approximately 75-80% of GDP and directly or indirectly employs half of the archipelago’s labor force. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. Manufacturing and agriculture combined contribute less than 7% of GDP and show little growth, despite government incentives aimed at those sectors. Additionally, it is a significant oil transshipment sector and a major shipping registration centre.
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While large capital projects like the Baha Mar Casino and Hotel have driven growth, public debt increased in 2017 in large part due to hurricane reconstruction and relief financing. The primary fiscal balance was a deficit of 0.4% in 2016.
The fiscal deficit expanded sharply to 6.1% of GDP in the 2019/20 fiscal year, owing to continued reconstruction after Hurricane Dorian in 2019, as well as outlays related to governments management of the fall-out from the pandemic.
During the last quarter of the 2019/20 fiscal year, the government spent over 57.3 million Bahamian dollars (B$) on medical supplies, rental of quarantine sites and support to households and businesses to cope with the pandemic. There was a major reversal in the balance of payments current account position from a surplus of 5.2% of GDP in the first half of 2019 to a deficit of 11.9% of GDP in the first half of 2020, largely owing to a collapse in tourism receipts.
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The COVID 19 pandemic, like other external shocks such as hurricanes and tropical storms, has severely affected the economy of the Bahamas. As at December 2020, real GDP output declined by a staggering -14.5% as compared to the previous year which saw a growth rate of 1.2%.