Domestic Economic Developments

The Bahamian economy advanced at a measured pace through August 2025, broadly in line with medium-term expectations. Growth momentum eased compared to the prior year, shaped by softer performance in stopover tourism and tighter monetary conditions. While the cruise segment continued to provide solid contributions, the overall tourism sector expanded at a slower pace. Labour market conditions weakened, with unemployment increasing for the first time in several quarters. Financial indicators also showed pressure, as banking system liquidity contracted due to stronger credit growth relative to deposits, while external reserves declined on account of net foreign currency outflows across the public and private sectors.

Tourism

Tourism earnings growth moderated relative to 2024, as capacity constraints in stopover accommodations limited expansion. In contrast, the cruise industry continued to perform strongly, benefiting from robust passenger demand and new investments in private destination infrastructure.

July data showed total visitor arrivals fell by 3.3% year-on-year to 1.1 million, with sea passengers down 3.8% and air arrivals slipping 0.9%. The Family Islands recorded the steepest decline, with overall traffic falling 9.7%. This was driven by both lower sea arrivals, which contracted by 10.1%, and reduced air traffic, which fell by 4.8%. Visitor numbers to New Providence were essentially flat, with a small drop in air passengers outweighing a modest increase in sea arrivals. Grand Bahama was the bright spot, with arrivals up 26.1%, supported by significant increases in both air and sea traffic.

Despite July’s softness, year-to-date arrivals were still up 8.5% to 7.4 million. This was underpinned by cruise passenger growth of 10.5% to 6.2 million, which offset a slight contraction in air traffic of 1.3% to 1.1 million. More recent airport data also indicated pressure on outbound travel, with total international departures declining 3.0% in August. U.S. markets contracted notably by 5.1%, while non-U.S. traffic expanded by 14.5%, partially cushioning the fall.

The vacation rental market displayed similar mixed trends. In August, total room nights sold rose modestly by 1.0%, but expanding supply weighed on occupancy, which fell to the mid-30% range. Average daily rates continued to strengthen, particularly for entire-place rentals, where prices climbed nearly 12% to above $500. On a year-to-date basis, performance remained broadly positive, with rental nights up nearly 8% and rates trending higher across all categories.

Employment

Labour market conditions softened in the first quarter of 2025. Provisional estimates showed the number of employed persons declined to 214,725 from 218,240 in the previous quarter, although employment remained slightly above levels recorded a year earlier. The unemployment rate rose to 10.8%, up from 9.0% in the final quarter of 2024 and 8.7% in the same period of 2024.

Youth unemployment remained elevated, climbing nearly three percentage points year-on-year to 20.9%. Across the islands, conditions worsened broadly. In New Providence, unemployment increased to 11.0%. In Grand Bahama, the jobless rate rose sharply to 12.8% from 10.0% in the prior quarter. Abaco also registered a significant increase, with unemployment reaching 13.8% in early 2025 compared to 9.2% at the end of 2024.

Outlook

Overall, the economy is maintaining forward momentum, though at a more tempered pace than in the previous year. Cruise activity and rental market performance continue to provide important offsets, but stopover tourism constraints and a softer labour market pose near-term challenges. Monetary and external sector developments underscore the importance of managing liquidity and foreign reserve pressures as the economy adjusts to shifting global and domestic conditions.

Source: (Central Bank of Bahamas)