The Department of Statistics Releases Gross Domestic Product 2010 Figures
According to these early results, the GDP in Current Prices for 2010 had a negative growth of 1.35% as compared to 2009 that had a negative growth of 5.26%. However, when measuring the real growth that occurred in the economy, (which is growth unencumbered by inflation) the Bahamian economy had a positive growth of 0.95% in Constant Prices.
The differences in the growth patterns in Constant and Current Prices in 2010 can be explained by examining the GDP by the Expenditure Approach, which is estimated as Government and Household Consumption combined with Investment and Exports minus Imports.
Exports account for approximately 30% of the total value of the items that contribute to the GDP on the Expenditure Side, therefore, any change in this sector will also influence the results. In 2010, Exports at Current Prices grew by $112 million but at Constant Prices it grew at a higher rate increasing by $162 million, which contributed to the positive real GDP growth. However, at Current Prices in 2009 the decrease was $680 million and in Constant Prices $218 million. This decrease was led by Tourist Expenditure, which fell in Current Prices by $499 million or 19%. Preliminary estimates for Tourist Expenditure indicate that The Bahamas experienced a slight recovery in 2010 after this major decline in 2009.
The Private Final Consumption Expenditure or household expenditure fell by 6% in real terms in 2009, but showed a slight recovery in 2010. In 2009, Households had less disposable income due to job losses and increasing prices but in 2010 had a slight recovery of a few jobs, some being employed with the Government's road improvement program, construction on the Airport Project, the dredging and expansion of the harbour, refurbishment of Saunders Beach and completion of the government tourism complex. Householders also substituted their lost earnings by becoming self-employed with informal businesses such as food sales and retailing of goods & services (e.g. dressmaking, maid work, gardening, phone card sales, etc.). Consumer spending was also echoed in the repayment of loans and borrowing pattern between 2008 and 2010, which according to the Central Bank, the consumer repayments of debt fell by 7% in 2009 but increased by 2% in 2010, and new credit extended to the households by lending institutions, fell by 19% in 2009 but increased by 2% in 2010.
The changes between 2009 and 2010 were also influenced by Government Expenditure, which decreased at Current Prices by $8 million in 2010 as government reduced the spending of all its Ministries and Departments with the exception of Public Health, according to the latest available Government Treasury Report 2009/2010. However, with deflation at Constant Prices, the Government Final Consumption Expenditure increased by $7 million in 2010.
Data on Mortgage Commitments, obtained from the Central Bank February 2011 Report, showed that in 2010 the Residential Mortgage Commitments fell by $73 million and Commercial Commitments fell by $36 million. Preliminary estimates of Construction Services Imported also show a decline of $5 million in 2010. The Machinery and Transportation Equipment also decreased by $75 million. All of these inputs resulted in a Gross Capital Formation (GCF) decrease in 2010.
In 2010, Imports in Current Prices increased by $210 million, which contributed to the 1.35% decline in GDP. However, in Constant Prices Imports fell by $63 million that influenced the slight increase in GDP. One of the contributing factors to this phenomenon was the increase in the Global Oil Prices. The Imports of Goods and Services were influenced by these oil prices as it represented 19% of Imports in 2008 ($852 million) and 2010 ($755 million), when it usually represented approximately 14% of all Imports. The USA Export Price Index for Petroleum and Petroleum Products was used to deflate the Oil Imports and then the remaining goods and services are deflated using the USA Export Price Index as 87.4% of all The Bahamas Imports came from the United States.
The National Accounts Section periodically undertakes revisions to the data, and in 2010, estimates for the GDP for 1997 to 2009 were revised based on the 2007 Supply and Use Tables (SUT) and updated and improved benchmark data.
The SUT is a comprehensive economic data integrating accounting framework. This framework imposes a simultaneous balancing of industries and commodities and thereby fosters more accurate and refined GDP results. It was introduced into the calculation of the 2007 GDP as part of the department's ongoing initiative to keep abreast with the changes in the UN's System of National Accounts. This resulted in a higher level of GDP for the entire period under review.
A simple demonstration of the SUT is displayed through the production and use of the commodity milk. On the supply side, milk is produced at a local farm or imported from abroad by a wholesaler and then sold to a retailer. On the use side, milk is used or consumed by households, government and industries such as bakeries which utilize it when preparing their goods. This milk in turn could also be exported to another country.
The updated benchmark data that facilitated the production of the 2007 SUT were:
1. The introduction in 2008 of an extended Tourist Expenditure Survey which provided more detailed information on tourist expenditure. This information was used to adjust previously released tourism data. Examples of newly added expenditure items are museums, golf, fishing, perfumes, hair braiding, weddings, etc.
2. The Department of Statistics 2006 Household Expenditure Survey which involved a sampling of a cross section of households, collected information on food items, utilities, transportation, domestic services and other charitable donations, etc. This provided a more detailed account of household consumption and was one of the major influences on the increase in the level of GDP.
3. The Department of Statistics' Economic Census conducted in 2007, collected information from all types of establishments. The data collected was extensive and had a wider than normal coverage, providing a benchmark for cost structures to be used in the annual surveys.
4. Tourism Satellite Account development is currently underway and involves an in-depth analysis of the tourist related commodities and industry relationships as revealed in the Supply and Use Tables.
These data sets provide actual data thereby eliminating estimation techniques previously used. The end result is a 2007 SUT that was utilized for the revised GDP figures. As stated previously, these GDP results, compared to those presented in previous years, show a marked increase in the level of GDP. This change is a direct result of the full implementation of the SUT of The Bahamas.
A more detailed analysis with tables will be available on the Department's website in June 2011.
The future plans for the National Accounts Section include the implementation of the Revised 2008 System of National Accounts and a quarterly Gross Domestic Product series. These projects will require research, additional data gathering and tabulation and are expected to allow the DOS to remain abreast with the world in the production of its National Accounts System.