- GDP (PPP):
- $12.8 billion
- 1.8% growth
- 0.9% 5-year compound annual growth
- $37,266 per capita
- Inflation (CPI):
- FDI Inflow:
The Bahamas’ economic freedom score is 64.6, making its economy the 70th freest in the 2021 Index. Its overall score has increased by 0.1 point, primarily because of an improvement in fiscal health. The Bahamas is ranked 13th among 32 countries in the Americas region, and its overall score is above the regional and world averages.
In terms of economic freedom, the Bahamas remains entrenched in the ranks of the moderately free where it has been since last making it into the mostly free category in 2016. The lower Bahamian scores in the ensuing years are due to problems in trade freedom, property rights, and government integrity. Enhanced openness and stronger rule of law are needed to improve overall economic freedom.
IMPACT OF COVID-19: As of December 1, 2020, 163 deaths had been attributed to the pandemic in the Bahamas, and the economy was forecast to contract by 14.8 percent for the year.
Hubert Minnis of the Free National Movement was elected to serve as prime minister in 2017 and faces high levels of public debt, low levels of economic growth, and rising levels of unemployment. The Bahamas is still recovering from a September 2019 Category 5 hurricane, which caused an estimated $3.4 billion in damage. The resulting decline in tourism revenue, which normally accounts for more than 60 percent of GDP, has delayed rebuilding efforts. Financial services are also important. How to replace the tariff revenues that could be lost if the Bahamas joined the World Trade Organization is the subject of an ongoing debate. Proximity to the U.S. makes the Bahamas a transshipment point for illegal drugs and human trafficking.
The Bahamas’ ranking for ease of property registration in the World Bank’s 2020 Doing Business report was among the worst in the world given the steps, time, and cost involved in the process. The judiciary is independent and based on British common law. Allegations of government interference in the judicial process are rare. Laws to combat corruption by public officials have been applied inconsistently.
The government imposes national insurance, property, and stamp taxes but no income, corporate income, capital gains, or wealth taxes. The overall tax burden equals 17.0 percent of total domestic income. Government spending has amounted to 20.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.5 percent of GDP. Public debt is equivalent to 63.3 percent of GDP.
Minority owners are benefitting from new rules requiring the disclosure of conflicts of interest. The business registration fee has been abolished. Labor relations, however, have become more strained. The government announced new subsidies in 2020, amounting to 0.6 percent of GDP, on top of existing subsidies.
The Bahamas has two preferential trade agreements in force. The trade-weighted average tariff rate is 18.0 percent, and nontariff measures further impede trade flows. New foreign investment is subject to a lengthy review process. The financial sector, the second most important contributor to the economy, is fairly competitive. In 2020, the central banks eased the ceiling on foreign exchange transactions for commercial banks.