Published by Neil Hartnell, Tribune Business, February 12th, 2025
Inflation and a “construction surge” have helped to expand The Bahamas’ now-$4.274bn annual trade deficit, it was argued yesterday, with one local firm suffering four prices increase from its supplier within a year.
Dr Leo Rolle, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, in an e-mailed reply to Tribune Business questions on behalf of the private sector advocacy group, said narrowing this record deficit “will be difficult, but not impossible” even though this nation produces very few physical goods for export.
“We note with concern the country’s ever-increasing trade deficit, reaching a record high of $4.2bn in 2024,” he wrote. “We are keen to continue to work with the Government, local manufacturers, importers and our members/stakeholders to narrow and reduce this.
We are a heavily import-reliant country with minimal local production, exacerbated by recent inflationary pressures locally and internationally, so decreasing this deficit will be difficult but not impossible.” Tribune Business reported yesterday that the trade deficit - which measures by how much physical goods imported to the country exceed this nation’s exports - broke through the $4bn mark for the first time last year.
This represents a 22.6 percent, or close to $750m year-over-year increase, on 2023’s trade deficit of around $3.487bn. However, Dr Rolle added: “We would note several conditions which may have contributed to the increased trade deficit. These may include a consequence of the cost of goods being imported, which has increased over the years, naturally leading to a widening of the deficit.
“We recently assisted a member in an exercise that studied the cost of procurement from their supplier over a one-year period, and were astonished to note that the price increased four times over the course of the year. Now imagine this scenario compounded throughout an import-reliant economy, where the vast majority of goods are imported.
“Additionally, we must consider the surge in construction, namely condos on western New Providence, resorts across the Family Islands, The Royal Beach Club, Carnival Cruise Port, Disney Cruise Port and others where materials must be imported, which is again a contributory consideration in the trade deficit.”
Summing the effects of all this, Dr Rolle and the Chamber said: “As an economy that produces very little for export, with a surge in construction activity and challenged inflationary pressures in the main market for imports, it becomes challenging for us to avoid the trade deficit we are seeing.”
However, he added that the Chamber is working with the Bahamas Trade Commission and the Government “to encourage incentivised local production and procurement” in a bid to help reduce the country’s import bill, and targeting overseas markets with trade missions “where we can identify cost effective opportunities for bilateral trade, thereby increasing our international footprint and positively impacting the trade deficit”.
Mr Rolle said the Chamber is also working with embassies and visiting trade delegations to help identify export opportunities for Bahamian producers, adding: “These measures, while miniscule in relation to our trade dilemma, have been the foundation for incremental deficit relief.”
Senator Barry Griffin, the Bahamas Trade Commission’s chairman, yesterday agreed that large and widening trade deficits can become a concern if left “unchecked”, but said the strategy is to “gradually narrow” the gap without choking off the economy’s momentum.
“The data from the Bahamas National Statistical Institute confirms that our trade deficit reached $4.2bn, driven by significant growth in both imports and exports. While a large trade deficit can be a concern if left unchecked, it is important to view these figures in the broader context of our nation’s economic activity and ongoing trade development strategy,” he said in a written reply to this newspaper’s inquiries.
“The increase in imports, particularly in categories like machinery, transport equipment and manufactured goods, reflects strong domestic demand fuelled by investments in infrastructure, increased tourism, business expansion and consumer needs. It should also be noted that the data is in current prices, so the increase in the actual cost of these goods should also be factored in these figures.
“Our imports have grown in sectors such as specialised heavy machinery where The Bahamas has no local alternative and must import these goods. These imports, in particular, support job creation and economic growth in key sectors such as construction and development.” Indeed, the largest import category for the 2024 fourth quarter was ‘machinery and transport equipment’ valued at a total $287m.
Still, the $4.274bn trade deficit for last year sets a new annual record, exceeding the six-year high of around $3.487bn in 2023 which was itself a 7 percent or $233m jump on the figures for 2022. The Bahamas in 2024 imported close to $5bn worth of goods, the actual number standing at $4.944bn, while exports in comparison stood at a relatively meagre $669.949m.
Mr Griffin, though, said: “Exports have also risen, with total exports increasing by 27 percent year-over-year in the fourth quarter, indicating growing opportunities in categories such as miscellaneous manufactured articles and food products.
“To address the trade imbalance, the Bahamas Trade Commission is actively pursuing several strategies aimed at enhancing export competitiveness and reducing import reliance as outlined in the National Trade Policy.”
Mr Griffin added that these measures include export diversification and promotion; local production and import substitution; and trade partnerships and agreements. “We are focused on identifying and supporting industries with high export potential, such as agro-processing, rum and alcoholic beverages, artisan manufacturing, and services, including tourism-related services,” he said.
“Facilitating better market access for these products and services will boost export revenues. An aim of our National Trade Diversification programme is also to open new markets for Bahamian goods and services.
“Through the Ministry of Agriculture, BAIC and BAMSI, we are collaborating with domestic industries to increase local production capacity, particularly in the agriculture and food sectors, ultimately reducing dependence on foreign goods where it is appropriate,” he added.
“We are strengthening ties with regional and international trade partners. That is vital to improving market access and competitiveness for Bahamian goods. The Trade Commission has worked with the Government of the United Kingdom with respect to export promotion and has supported the participation of rum producers at a tasting event in Europe.
“The Trade Commission, in collaboration with the Chamber of Commerce and the government of Canada, will be hosting a trade mission at the end of February to explore opportunities in technology and energy between the two countries. We have already hosted trade missions from countries such as Jamaica and Trinidad. And we have also engaged countries like Brazil in high level trade discussions and trade missions.”
Mr Griffin said the Trade Commission will also partner with the Chamber of Commerce “to empower small and medium-sized enterprises (SMEs) to scale their production for both local and export markets”.
He added: “There are have several engagements, including a session on export opportunities for services, which was conducted in collaboration with Caribbean Export. The Trade Commission has established an Export Readiness Committee to further target initiatives in this area.
“Together, our efforts intend to address short-term considerations while prioritising long-term sustainable trade growth. By promoting a balanced approach to imports and exports, we aim to gradually narrow the trade deficit while maintaining strong economic momentum. This government is committed to ensuring that The Bahamas continues to thrive in a dynamic and ever-changing global economy.”
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