2018 Index of Economic Freedom

The Bahamas

overall score63.3
world rank74
Rule of Law

Property Rights46.5

Government Integrity50.9

Judicial Effectiveness53.5

Government Size

Government Spending82.9

Tax Burden96.5

Fiscal Health59.0

Regulatory Efficiency

Business Freedom68.3

Labor Freedom64.6

Monetary Freedom79.2

Open Markets

Trade Freedom52.7

Investment Freedom45.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $9.0 billion
    • 0.5% growth
    • 0.2% 5-year compound annual growth
    • $24,555 per capita
  • Unemployment:
    • 15.3%
  • Inflation (CPI):
    • 0.4%
  • FDI Inflow:
    • $521.9 million
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The Bahamas’ economic freedom score is 63.3, making its economy the 74th freest in the 2018 Index. Its overall score has increased by 2.2 points, led by dramatic improvements in scores for fiscal health, government integrity, and judicial effectiveness. The Bahamas is ranked 15th among 32 countries in the Americas region, and its overall score is above the regional and world averages.

As it looks to improve a perilous fiscal situation resulting from recent hurricanes, the government has cut red tape in business licensing, procurement, and business-related immigration. It also aims to streamline public-sector spending. Emergence of a more dynamic and sustainable private sector has been held back 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.



The Free National Movement defeated the long-dominant center-left Progressive Liberal Party in May 2017. New Prime Minister Hubert Minnis faces soft economic growth, double-digit unemployment, high household indebtedness, and $600 million in damages from an October 2016 hurricane. 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 that is not a member of the World Trade Organization; politicians and the private sector remain at loggerheads about how to replace the tariff revenues that WTO membership would cost. Proximity to the U.S. makes the Bahamas a transshipment point for illegal drugs and human trafficking.

Rule of LawView Methodology

Property Rights 46.5 Create a Graph using this measurement

Government Integrity 50.9 Create a Graph using this measurement

Judicial Effectiveness 53.5 Create a Graph using this measurement

Property disputes can be challenging; cases sometimes drag on for several years. Property registration is difficult and time-consuming, but new civil procedure rules introduced by the government have made contract enforcement easier. The independent legal system is based on British common law, but judicial inefficiency causes trial delays. The new government has pledged to fight the corruption that has been a problem 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 18.8 percent of total domestic income. Over the past three years, government spending has amounted to 23.8 percent of total output (GDP), and budget deficits have averaged 4.5 percent of GDP. Public debt is equivalent to 66.9 percent of GDP.

Regulatory EfficiencyView Methodology

Increased fees and registration costs have made starting a business more difficult, and the recently implemented value-added tax has complicated the payment of taxes for businesses. The labor market is relatively flexible, but enforcement of the labor codes is not uniform. The government may privatize some state-owned enterprises or quasi-government corporations to retire debt and reduce the drag of subsidies on government finances.

Open MarketsView Methodology

Trade is significant for the economy of the Bahamas; the combined value of exports and imports equals 84 percent of GDP. The average applied tariff rate is 18.7 percent. Nontariff barriers impede some trade. Government openness to foreign investment is below average. The 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 States75.70.6
4Uruguay 69.2-0.5
5Jamaica 69.1-0.4
8Saint Vincent and the Grenadines67.72.5
9Saint Lucia67.62.6
10Panama 670.7
11Costa Rica 65.60.6
14Guatemala 63.40.4
15The Bahamas63.32.2
16El Salvador 63.2-0.9
17Paraguay 62.1-0.3
18Dominican Republic61.6-1.3
19Honduras 60.61.8
20Nicaragua 58.9-0.3
22Trinidad and Tobago57.7-3.5
32Venezuela 25.2-1.8
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