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Bahamas: Country and Foreign Investment

Economy and Currency

The unit of currency is the Bahamian dollar which has parity against the US dollar; the US dollar is also accepted.

The Bahamian economy was weak in the years after the Second World War, but determined efforts to develop the tourist trade have been successful, so that it contributes more than 60% to GDP; more recently, the government has encouraged the financial services industry, particularly banking and insurance, which also represent substantial components of GDP.

The Bahamian economy is closely linked to that of the US, and inflation rates are comparable. Unemployment has been a continuing problem in the Bahamas and was around 14% in 2012 (est.). The Bahamas run a substantial trade deficit due to very high import levels. GDP was USD11.24bn in 2012 (est) at purchasing power parity, and GDP per head was about USD31,900 in 2012 (est) at PPP. This is above average for the region, but well behind the most successful (and smaller) jurisdictions such as the Cayman Islands and the British Virgin Islands.

In June 2009, the IMF concluded that the global economic downturn had put significant stress on the Bahamian economy because of its strong ties to the US economy, although the Bahamas’ low debt ratios provide scope to deal with the current difficult economic environment.

Since mid to late 2008, tourism began declining and a number of foreign direct investment projects were postponed or cancelled due to the downturn or financing difficulties. Real GDP contracted by 1.7% in 2008 after having grown 2.5% per year in 2006–07, and rising unemployment was fuelled by layoffs in the hotel and construction sectors. Inflation for 2012 is estimated to be around 2.8%.



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