The Bahamas

A prolonged period of stagnation has resulted in declining income relative to neighboring countries, concerns about fiscal sustainability, and a severe household debt overhang problem. Elevated public debt, limited external buffers, and a pegged exchange rate regime, constrain the policy space to respond to shocks. A stronger U.S. economy and the opening of a mega resort are expected to lift real GDP growth to 1¾ percent this year and 2½ percent in 2018, but potential growth remains low, reflecting structural impediments. A new administration—in office since mid-May— has pledged a strong commitment to revive growth and restore fiscal accountability and discipline.