2019 Index of Economic Freedom

The Bahamas

overall score62.9
world rank76
Rule of Law

Property Rights42.2

Government Integrity43.7

Judicial Effectiveness46.9

Government Size

Government Spending86.8

Tax Burden97.3

Fiscal Health65.7

Regulatory Efficiency

Business Freedom68.5

Labor Freedom67.5

Monetary Freedom78.1

Open Markets

Trade Freedom47.8

Investment Freedom50.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $11.6 billion
    • 1.3% growth
    • -0.7% 5-year compound annual growth
    • $31,139 per capita
  • Unemployment:
    • 12.6%
  • Inflation (CPI):
    • 1.4%
  • FDI Inflow:
    • $927.7 million

The Bahamas’ economic freedom score is 62.9, making its economy the 76th freest in the 2019 Index. Its overall score has decreased by 0.4 point, with declines in scores for government integrity and judicial effectiveness outpacing increases in fiscal health and investment freedom. The Bahamas is ranked 15th among 32 countries in the Americas region, and its overall score is above the regional and world averages.

The government’s top priority is reducing the fiscal deficit. To stimulate the economy, it has simplified business licensing, procurement, and business-related immigration. It also has taken new steps to foster development of small and medium-size enterprises and encourage local investment. Private-sector growth has been constrained by weak rule of law, lingering protectionism, heavy subsidies to state-owned enterprises, and a bloated and slow-moving bureaucracy. Nevertheless, the overall regulatory system is conducive to entrepreneurial activity, and there are no individual or corporate income taxes.



Prime Minister Hubert Minnis of the Free National Movement party, elected in 2017, faces soft economic growth, high unemployment, high household indebtedness, and the costs of ongoing repairs made necessary by recent hurricanes. Tourism accounts for more than 60 percent of GDP. International banking, investment management, and financial services are also important. The Bahamas is the only Western Hemisphere country not to have joined the World Trade Organization, and Minnis is seeking to reactivate the accession process with the goal of achieving full membership by 2019. Debate continues regarding how to replace the tariff revenues that could decline with WTO membership. Proximity to the U.S. makes the Bahamas a transshipment point for illegal drugs and human trafficking.

Rule of LawView Methodology

Property Rights 42.2 Create a Graph using this measurement

Government Integrity 43.7 Create a Graph using this measurement

Judicial Effectiveness 46.9 Create a Graph using this measurement

The government has in recent years made property registration somewhat easier, but difficulties remain. The independent legal system is based on British common law, and contracts are enforced. The judicial process is inefficient, however, and trials can be delayed. Retaliatory crimes against both witnesses and alleged perpetrators have increased. Money laundering and corruption are problems at all levels of government.

Government SizeView Methodology

The government imposes national insurance, property, and stamp taxes but no income, corporate income, capital gains, or wealth taxes. The overall tax burden equals 16.3 percent of total domestic income. Over the past three years, government spending has amounted to 21.0 percent of the country’s output (GDP), and budget deficits have averaged 4.2 percent of GDP. Public debt is equivalent to 57.2 percent of GDP.

Regulatory EfficiencyView Methodology

The Bahamas has made starting a business easier by merging the processes of registering for a business license and registering for the value-added tax. The labor market is relatively flexible, but the existing labor codes are not enforced effectively. Subsidies to state-owned enterprises such as Bahamas Air, which has recorded annual losses for two decades, continue to be a drag on government finances.

Open MarketsView Methodology

The combined value of exports and imports is equal to 75.5 percent of GDP. The average applied tariff rate is 18.6 percent. Emergence of a more dynamic and sustainable private sector has been held back by protectionism and a bloated bureaucracy. Financial services are relatively competitive. The Bahamas’ diversified banking sector remains stable, but the number of nonperforming loans has increased.

Country's Score Over Time

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Regional Ranking

rank country overall change
2United States76.81.1
4Saint Lucia68.71.1
5Jamaica 68.6-0.5
6Uruguay 68.6-0.6
9Panama 67.20.2
10Saint Vincent and the Grenadines65.8-1.9
11Costa Rica 65.3-0.3
15The Bahamas62.9-0.4
16Guatemala 62.6-0.8
17El Salvador 61.8-1.4
18Paraguay 61.8-0.3
19Dominican Republic61-0.6
20Honduras 60.2-0.4
21Nicaragua 57.7-1.2
22Trinidad and Tobago57-0.7
32Venezuela 25.90.7
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