Bahamas Economic Growth Revised Downwards

• BMI analysts forecast real GDP growth to average 1.7% per year over 2026-2035 for the Bahamas, slightly slower than 2.1% over the previous 10 years. Bahamas’ performance is anticipated to be constrained by structural capacity limits in tourism, slow labour force growth and incomplete public sector reform.
• For 2026, growth is forecasted to come in at 1.9%, a downward revision from the previous 2.2% forecast. The negative impact of the Iran conflict on oil import costs and household purchasing power has driven this. However, the impact will be partially offset by the government's fuel hedges.
• The Bahamas’ fuel hedge is a financial risk-management strategy introduced in partnership with the Inter-American Development Bank in 2020 and later expanded in December 2025 through Bahamas Power and Light (BPL). The hedge locks in fuel prices for part of the country’s oil imports, covering about 2.5 million barrels for 365 days at $70 per barrel, helping shield households, businesses, and public finances from sudden spikes in global oil prices driven by external shocks such as the U.S.-Iran conflict.
• Furthermore, BMI noted that political stability will remain a tailwind for the economy, with centre-left Prime Minister Phillip 'Brave' Davis and his Progressive Liberal Party having comfortably won re-election on May 12^th by securing 33 of 41 seats up for grabs.
• This was the first time in over 30 years that an incumbent had won re-election in The Bahamas, a development that will help to sustain the steady progress that has been made toward returning the public finances to a sounder footing since the pandemic.

(Sources: BMI, A Fitch Solutions Company, Fitch Ratings, & NCBCM Research)