Bahamian businesses are looking cautiously ahead as they enter 2005. With the results of hurricanes Frances and Jeane still fresh particularly in Grand Bahama and Abaco, the various sectors are gearing up for a competitive year.
Already hotels have been cutting their prices as they compete for their share of the travel industry.
Despite the natural disasters, which caused some adjustment in expected budget items and revenues, the economy is nonetheless expected to move along a fair clip.
Central Bank Governor Julian Francis, has noted that the Bahamian economy is looking at a sustained period of growth starting with a 4 percent growth in 2005.
Not all sectors of the economy will necessarily benefit from this growth.
The poultry industry has been hard hit. Since the demise of Gladstone Farms, which never fully recovered from earlier hurricane damage; the wipe out of Bahama Poultry in Grand Bahama and the significant damage to the Big Byrd Poultry Farm in Abaco, the poultry industry in The Bahamas is in a rebuilding mode with significant portions of the market lost to imports.
The financial services sector continues to respond to competitive demands.
As one of the last acts of 2004, the Securities Commission announced its ﾓfast trackﾒ approval process of applications for Professional Investment Funds and those funds that target accredited or high net worth investors.
The regulations are a response to competitive pressure for a more rational registration regime that is both efficient and timely.
The BISX continues to await an infusion of confidence in the form of government securities. The liquidity problem that plagues the BISX cannot continue indefinitely. As a result, it is losing out on developments in the market.
Bahamas First General Insurance (BFG) the countryﾴs largest general insurer, is not listed on the BISX, so the $5 million it is raising for capital investment and that will enable BFG to respond to market trends is being raised outside of the BISX.
BFGﾴs President Patrick Ward said that once it was known that BFG was interested in raising capital, it had investors lined up ready ﾓto give us the money todayﾒ.
He said investors were looking for alternatives to the BISX primarily because of the liquidity problems.
The BISX was given an infusion of cash by the government during the third quarter of 2004, as the exchange sort to become profitable, but analysts have long maintained that the BISX, which is a privately held company, would be much more attractive to investors if government securities and those of the National Insurance Board were traded on the BISX.
In retail, as Bahamasair continues to operate more efficiently, and Florida merchants provide more competitive prices, Bahamian merchants will have to start reducing prices and have more promotions to attract customers.
Already, the phenomenon of discount retailers in household goods and groceries are making a dent judging from the traffic at the Mall.
In a price sensitive environment, the larger retailers such as Solomonﾴs Super Centre and Kellyﾴs have to be nimble against the discount retailers such as Robin Hood, Price Busters and the Dollar Store.
Despite the adjustments to be made by various sectors, overall, the year ahead ﾖ barring major natural disasters ﾖ looks to see an improvement over 2004.
With increased building activity on major investment projects such as Paradise Island and Abaco, the domestic banking sector can expect to enjoy increased profits as consumers begin to take advantage of the liquidity in the banks, spending on home improvement, new homes, major appliances, education, travel and automobiles.
All this economic activity should see the domestic banking sector recover some of the ground it lost during the prolonged lending freeze during 2004.
C. E. Huggins, The Bahama Journal
