Smith: U.S. govt shutdown could hurt tourism
Guardian Senior Reporter
Published: Oct 07, 2013
If the partial shutdown of the United States government is protracted it could have “troubling” repercussions for the Bahamian tourism industry, warned local financial analyst James Smith.
During an interview with The Nassau Guardian, Smith said the northeast coast of the United States, the area where government workers were “immediately” affected by the shutdown, accounts for around 86 percent of The Bahamas’ tourism market.
“So any falloff in incomes of the people who live in that area, if those people were also planning vacations to The Bahamas, it follows that they are likely to defer those plans or to cancel them altogether,” said Smith, a former minister of state for finance.
“If this happens we would obviously have [fewer] visitors, less expenditure and it could [cause] some contraction in our economy.”
Smith said the magnitude of the impact on The Bahamas would depend on how long the shutdown lasts.
“If it’s only for a short period of time then obviously the fallout would be very small, but I suspect it will be a fallout one way or the other,” Smith said.
“It’s really based on the falloff in confidence in the consumers. Getting up one day and realizing you don’t have a job, even if it turns out that was only for a week you still [wonder] ‘Is my job secure or not?’
“And you might decide that this year I better not travel like I had planned and while I hope stuff like that doesn’t happen, we have to be very sensitive to any changes in the U.S. economy, particularly in the northeast — Washington, New York, Philadelphia — those areas,” Smith said.
The U.S. Congress’ failure to reach a decision on a new budget last week resulted in the government closing non-essential operations.
The move meant that more than 800,000 U.S. government workers were sent home from work temporarily.
Smith said even if the standoff is resolved before the end of October, The Bahamas could still feel repercussions.
He also fears that wrangling over the raising of the U.S. government’s debt ceiling will have spillover effects for The Bahamas.
The U.S. Congress has until October 17 to raise its debt ceiling or the country could default on its debts.
“This thing could possibly last until the end of the month and then there’s another fight over the debt ceiling, so the uncertainty is really what will impact us even if it’s short-lived,” Smith said.