NASSAU, Bahamas (CMC) – The Central Bank of The Bahamas (CBB) says the domestic economy is projected to expand at a steady pace in 2026, relative to last year, as key indicators move closer to their medium-term growth potential.

It said tourism, a primary driver of economic growth, is expected to remain robust, supported by stronger high-value added stopover performance and healthy growth in the cruise sector. In addition, new and ongoing investment projects are anticipated to provide further impetus to construction activity and employment.

In its Monthly Economic and Financial Developments July 2026, the CBB said that inflationary pressures and heightened geopolitical risks have become more prominent, particularly due to higher fuel and import costs.

“From a fiscal perspective, the government’s net financing gap is expected to narrow as the domestic economy expands. Improvements in fiscal performance remain linked to increases in tourism-related taxable activities and to the anticipated minimum corporate tax.

“Moreover, financing requirements are anticipated to be met through a combination of domestic and external borrowing, with domestic sources accounting for the larger share. Within the monetary sector, banking sector liquidity is projected to remain elevated, although continued growth in private sector credit could result in a modest reduction.”

The CBB said that external reserves are forecasted to remain broadly in line with 2025 levels, remaining well above international benchmarks and providing sufficient support for the Bahamian dollar currency peg.

It said despite a favourable outlook, downside risks persist amid uncertain externalities. In particular, stopover demand from the United States remains vulnerable to ongoing tensions in Eastern Europe, the escalated conflict in the Middle East, and continued global tariff policy uncertainty.

“Moreover, elevated energy prices could further weigh on near-term travel demand, drive cost-push inflation, increase financing costs for foreign direct investment, and delay reductions in the government’s interest costs,” the CBB noted.

It said during the month of July, the domestic economy expanded at a stable pace, vis-à-vis the corresponding 2025 period and that while key indicators continued to trend towards their medium-term potential, tourism output gains strengthened, as earnings growth indicators for the high value-added stopover segment improved, while cruise inflows remained robust.

Meanwhile, monetary developments in the review month revealed a reduction in banking sector liquidity, as the growth in domestic credit outpaced the buildup in the Bahamian dollar deposit base. Similarly, external reserves declined in July, on account of foreign currency outflows through both the private and public sectors.

The CBB said that in the tourism sector, initial data suggests that tourism output growth formed during the review month, relative to the same month in the previous year, undergirded by increased travel demand from key source markets.

It said underlying this outturn, was an estimated rebound in high-value stopover volumes, notwithstanding accommodation capacity constraints, and ongoing gains in the cruise sector.

The most recent data provided by the Nassau Airport Development Company Limited (NAD) showed that in July, total departures rebounded by 7.1 per cent to 180,831, compared to the same period in the previous year.

In particular, non-US international departures grew by 24.3 per cent to 23,362. Further, US departures rose by five per cent to 157,469. On a year-to-date basis, total outbound traffic mover higher by 5.4 per cent to 1.1 million. Specifically, non-US traffic advanced by 33.7 per cent to 0.2 million, while US departures recovered by 0.8 per cent to 0.9 million.

In the short-term rental market, AirDNA data indicated that total room nights sold increased by 10.5 per cent to 63,399 in July, vis-à-vis the same 2025 period. Further, the average daily room rate (ADR) for hotel comparable listings moved higher by 7.7 per cent to US$177.49, relative to a year earlier. Likewise, the average daily room rate for entire place listings firmed by 5.3 per cent to US$749.33, from the preceding year.

During the review month, The Bahamas external reserves decreased by US$67.7 million to US$3,227.9 million, extending the US$15.7 million reduction in the comparable 2025 period. Contributing, the central bank’s net sale to the public sector almost doubled to US$53.2 million from US$27.1 million in the prior year.

In addition, the bank’s net foreign currency transactions with commercial banks switched to a net outflow of US$15.3 million, from a net inflow of US$13.7 million in the preceding year. In turn, commercial banks recorded a net sale of US$42.3 million to customers, vis-à-vis a net purchase of US$36.3 million last year

During the month of July, domestic foreign currency credit grew further by US$10.3 million vis-à-vis a US$7.6 million rise in the prior year. Reflective of this outturn, the rise in net claims on the government approximately doubled to US$8.6 million.

However, the CBB said private sector credit growth narrowed to $1.7 million from $2.8 million last year. Contributing, mortgages rebounded by US$2.4 million, from a US$0.5 million decline last year; whereas commercial loans fell by US$0.7 million, following a US$3.3 million gain in 2025. Meanwhile, credit to public corporations remained unchanged.

The  CBB said that given the current outlook, the central bank will retain its accommodative policy stance toward private sector credit, while implementing measures to ensure a positive outcome for external reserves and financial stability.

“Through its Monetary Policy Committee (MPC), the bank will continue to monitor developments within the foreign exchange market and, where necessary, implement appropriate measures to ensure the stability of foreign reserves,” it added.