NASSAU, Bahamas (CMC) – The Central Bank of  the Bahamas (CBB) says preliminary indicators are that the domestic economy grew at a moderated paced up through the month August, relative to the year earlier, as performance indicators continued to trend closer to their expected medium-term potential.

“Notably, tourism output rose at a slower pace, as a result of more constrained activity in the high value-added stopover segment, although the cruise sector earning growth remained buoyant,”  the CBB said in the publication of its Monthly Economic and Financial Developments (MEFD) August 2025 report.

It said the unemployment rate increased for the first quarter of 2025, vis-à-vis the final quarter of 2024, owing in part to a decrease in employed people, and a rise in the labour force participation rate.

The CBB said that monetary trends for August were marked by a contraction in banking sector liquidity, as the growth in domestic credit outpaced the rise in the deposit base. Further, external reserves decreased, underpinned by net foreign currency outflows through both the public and private sectors.

The central bank said that indications are that growth in tourism sector earnings slowed in comparison to 2024, owing to accommodation capacity constraints in the stopover segment. “Nonetheless, the cruise segment continued to register year-to-date robust gains and attract foreign investments in the development of onshore private destinations, despite a slowdown in the month of July.”

Official data provided by the Ministry of Tourism showed that for the month of July, total arrivals decreased by 3.3 per cent to 1.1 million visitors, vis-à-vis the same 2024 period. Specifically, sea passengers reduced by 3.8 per cent to 0.9 million. In addition, air traffic declined by 0.9 per cent to 0.2 million.

The CBB said that recent data from the Nassau Airport Development Company Limited (NAD) revealed that total departures, reduced by three per cent to 150,366 in August, relative to the same period last year.

In particular, United States (US) departures declined by 5.1 per cent to 130,911. In an offset, non-US departures rose by 14.5 per cent to 19,455.

The CBB said that in the short-term vacation rental market, data provided by AirDNA indicated that in August, total room nights sold rose by one per cent to 55,790.

“However, given increased inventories, the occupancy rates for both entire place and hotel comparable listings declined to 36.9 per cent and 37. per cent, respectively, from 38.8 per cent and 42.1 per cent in the previous year.

“The average daily room rate (ADR) for entire place listings increased by 11.8 per cent to US$510.78, compared to the prior year. Likewise, the average daily room rate (ADR) for hotel comparable listings moved higher by 1.1 per cen to US $173.47, relative to the comparative 2024 period,” it said.

The CBB said that based on provisional quarterly estimates compiled by the Bahamas National Statistical Institute, labour market conditions deteriorated over the first quarter of 2025 as against the final quarter of 2024, owing in part to a rise in the number of unemployed people, and a hike in the labour force participation rate.

In particular, the number of employed individuals decreased to 214,725 in the first three months of 2025, relative to 218,240 in the previous quarter, although marginally higher than the 213,585 people recorded in the first quarter of 2024.

“Correspondingly, the unemployment rate rose to 10.8 per cent in the first quarter from 9 per cent in the prior quarter, and 8.7 per cent in the comparable period of 2024. Further, the youth unemployment rate increased by 2.9 percentage points to 20.9 per  cent in the review quarter, as compared to same quarter of the preceding year,” it said

In August, the reduction in external reserves moderated to US$74.7 million from the US$92.4 million in the previous year, for an ending balance of US$2,888 million.

The CBB said underlying this outturn, the central bank’s net sale to commercial banks tapered to US$52.3 million, from US$75.4 million a year earlier. Similarly, commercial banks’ net foreign currency outflow to their customers declined to US$53.9 million, from US$85.8 million in the same period of 2024.

Meanwhile, the central bank’s net foreign currency outflow to the public sector widened to US$31.4 million, from US$23.9 million in the preceding year.

The central bank said that as economic indicators converge closer to their medium-term growth potential, the domestic economy is forecasted to expand at a slower pace in 2025, compared to 2024, mainly in line with tourism sector performance.

“Notably, performance in the stopover segment—which is partially linked to movements in the US-sourced market—is expected to register moderated gains, against the backdrop of accommodation constraints and more subdued consumer confidence in the US. However, the cruise sector is expected to sustain robust growth—albeit a less dominant weight in earnings estimates.

“Further, new and ongoing foreign investment projects, with a significant focus on onshore cruise attractions, are expected to provide impetus to the construction sector. Notwithstanding this, downside risks to the outlook have risen, due to increased tariffs on international trade, and uncertainties related to the major economies’ trade policies, which have the potential to slow tourism demand, and constrain global growth,” said the CBB.

It said that other exogenous risks to the outlook remain relevant, including the direct and indirect effects of heightened geopolitical tensions and elevated global oil prices.