|Total imports expand to $3.4B|
Guardian Business Editor
Published: Jun 28, 2012
Bahamian imports totaled $3.4 billion in 2011, according to the latest numbers from the Department of Statistics, representing an increase of around $500 million.
Annual trade data for last year further reveals a modest improvement on merchandise exports, totaling 726.9 million compared to $621.4 million in the previous year.
The Bahamas had a overall trade balance of -$2.68 billion, worsening by more than $400 million.
Rick Lowe, vice president of The Nassau Institute, a local think tank, said high imports and low exports shouldn't come as surprise to Bahamians and it will not change anytime soon. A growing population and continued reliance on foreign fossil fuels will only spell more reliance on imports. That said, it underscores the dire need for local industry and diversification of the economy.
"Do we have the skills and assets? Do we have the resources?" he said. "We sell holidays and banking for as long as we can get away with it."
Food and live animals were the third biggest source imports last year, amounting to $463.5 million, or 14 percent. Mineral fuels, primarily oil and gas, were by far the biggest expenditure, amounting to $930 million, or 72 percent of total imports.
By contrast, The Bahamas exported $75.5 million worth of food and live animals, nearly $400 million less than it purchased from other countries.
Lowe told Guardian Business that boosting the agricultural sector has been a catch-phrase for political leaders on both sides. He said the government needs to stop looking for blanket solutions, such as farmer subsidies, which are expected to quickly right the ship.
"It doesn't happen overnight. A politician doesn't get up, make a speech and use mystical powers," he noted. "We just need to continue farming, and supply what we can supply. We set ourselves up for failure when we believe we can immediately become self-sustaining."
Not surprisingly, The Bahamas imported 82 percent of its goods from the U.S., or $2.8 billion. The next country that comes close was Puerto Rico, at $235 million. The report said trade between The Bahamas and CARICOM countries "was minimal" representing 5 percent of imports and less than 1 percent of exports.
James Smith, chairman of CFAL and a key advisor to the current administration, pointed out that the high price of oil during periods of 2011 would account for some of the new figures. The real concern, he said, is the need for foreign direct investment and high tourism numbers to balance things out.
"I think in the medium term you have to make the country more attractive to direct investment and see the return of tourists in great numbers. You have the Baha Mar project, which will obviously assist in that effort, but you need a much more diversified product. Grand Bahama and the Family islands need continued investment," Smith said, who is also a former minister of state for finance.
A small population base with high costs lead to some hard economic realities to overcome, he added.
Zhivargo Laing, former minister of state for finance under the last administration, said the rising imports should be looked at in a positive light. As an importing country, higher imports reflect an uptick in activity, showing Bahamian consumers are buying and developing more.
The real issue, Laing explained, is being able to finance the imports.
"In the case of The Bahamas, you look at the other side, which is tourism receipts. The extent to which we show a surplus on that end to finance our current account, is the extent to which we are doing better," he said. "That can't deteriorate at the same time."
Tourism arrivals have indeed picked up in 2012, although they remain behind pre-recession levels, according to the Ministry of Tourism.
"The last thing you want is imports outpacing exports to cause you to be in a situation where you drain your foreign reserves," Laing said.
The biggest export for The Bahamas in 2011 was chemicals, totaling $210.8 million. This sector increased 13 percent over the previous year.