Central Bank Governor John Rolle said yesterday that after a year of economic growth in 2022, The Bahamas is expected to see continued healthy economic recovery in 2023, with projected economic growth anywhere in the four to six percent range. He warned, however, that inflation will continue to add pressures.
With Bahamians feeling the pressure caused by rising prices, Rolle could say little to instill hope in regards to near-term relief.
He said there’s no indication that rising prices have plateaued, and based on established trends, The Bahamas has not seen the worst just yet.
“It’s difficult for us to say whether inflation in The Bahamas has peaked yet. I think what people would have observed is that the published inflation rates in The Bahamas have been lower than those in the United States. To the extent that we are trailing the United States, we could conceivably see a further rise in the rate of inflation before it starts to taper off,” he said during the first quarterly economic press briefing for the new year yesterday.
“That is not to say that we will see a one-to-one rate of inflation at its highest point as there was in the US. That point is very important to note.”
“The concern that central banks have in general about prolonged inflation is that if it isn’t dealt with, it will become a distraction and lead to less than optional activity on the part of businesses, in terms of how they are doing their investment planning,” he said.
“It could lead to uncontrolled spiraling in terms of pressures in the wage setting and negotiation process in the private sector, so you could have almost a self-sustaining process of inflation that is not even grounded in what’s’ going on, in terms of the supply and the demand for goods and services. So getting inflation under control is also about making certain that we somehow soothe expectations and concerns that might lead to additional inflation.”
The central bank governor added that inflation will continue to cause constraints in terms of the buildup of foreign reserves.
“For us, the concern would also be as a country that imports a substantial amount of its goods and services that all else considered, you’re having to allocate a greater portion of your foreign exchange earnings just to meet whatever level of consumption you may be undertaking,” Rolle added.
“So inflation does mean for a country like The Bahamas, a slightly enlarged tranche of your foreign exchange earnings are being diverted into consumption, as opposed to savings. And equally that you’re having to make difficult decisions around how you prioritize spending.”
