NASSAU, BAHAMAS — Moody’s investors Service says that it now expects the country’s economic rebound to be lower this year and GDP growth in 2022 to be higher than previously forecast.
The ratings agency in a update yesterday noted that still-depressed tourist flow will hamper this nation’s growth this year. Last summer Moody’s lowered the country’s credit rating two notches from Baa3 to Ba2 with a negative outlook.
“The pandemic severely disrupted the Bahamas’ economic prospects in 2020, exacerbating the already debilitated economic environment caused by Hurricane Dorian in 2019. The pandemic weakened economic activity in the country because of the government-mandated lockdown imposed in early March 2020, which hurt both domestic economic activity and tourist flow.”
The ratings agency added, “Restrictions, including those on travel, were eased in July 2020, but flare-ups resulted in subsequent cycles of restrictions being reimposed and lifted. In 2020, tourist flow to the Bahamas did not recover. The major hotels in the country, such as Atlantis and Baha Mar, remained closed until December 2020; they are currently operating at reduced capacities. Full-year data is not yet available, but we expect the tourist flow to the Bahamas in 2020 to be only around a quarter of the 2019 levels.”
Noting that it expects delays in the tourism revival, Moody’s said it has adjusted its GDP growth forecasts. “Tourism did not recover in the last quarter of 2020. The significant decline in tourist arrivals, coupled with the high number of COVID cases in the US- the Bahamas’ main source of tourists – has led us to revise our previous expectation that tourist flows would recover in H1 2021. We now expect the economic rebound in 2021 to be lower and GDP growth in 2022 to be higher than our previous forecast. This expectation relies on the assumption that tourism will not increase materially until H2 2021 as vaccination efforts bring the pandemic under control in the US and restore the appetite for international travel,” Moody’s said.