NASSAU, BAHAMAS — The Bahamas ultimately needs to improve its export diversification to build resilience to external shocks according to a draft national trade policy for the country.
The draft document, which gives an in-depth analysis of The Bahamas’ trade performance and its underlying challenges, noted that the Bahamas’ overall exports performed well until the outbreak of the COVID-19 pandemic.
“They grew steadily from around $400 million BSD in 2016 to $537 million BSD in 2019 (equivalent to an average annual increase of 10.1%) but then fell 37.7% in the COVID-19 year of 2020, to reach $335 million BSD. However, more than half of Bahamian exports are re-exports of previously imported products. In addition, the share of genuine “domestic exports”, i.e. exports of goods produced in the Bahamas, fell from 50% in 2016 to 38% in 2019. The recovery to 48% in 2020 is not not necessarily a sign of increased competitiveness, but rather of the problems faced by the logistics industry and the tourism sector during the pandemic year,” the document states.
It was noted that export statistics do not capture all actual exports, as they tend to exclude sales to tourists. While in the country; these are recorded as domestic sales although they are in fact (indirect) exports.
“The portfolio of goods and services exported by the Bahamas is not diversified. Among goods, in 2019, the top four export products (at the tariff line level) accounted for 90% of total national exports: lobster tails (BSD $72.6 million; 35.8%), polystyrene ( BSD $67.9m; 33.5%), compound organic chemicals containing pyrimidine ring (BSD 32.3m; 15.9%) and sea salt (BSD $10m; 4.9%) “, notes the document.
Provisional data for 2020 indicates that the pandemic has led to even greater concentration of exports than before. Additionally, one of the dominant exports, polystyrene beads, “showed a long-term decline in export value, from a peak of BSD$182 million in 2013 to BSD$69 million in 2019, and BSD$55 million in 2020 – largely in response to growing environmental concerns in many markets over the use of plastic packaging and related bans”.
Concentration is also high in terms of export markets – The Bahamas’ trade in goods is concentrated in very few partners, foremost the United States followed by the European Union. Among services, the vast majority of exports are tourism and travel services.
The paper notes that “ultimately, export diversification is necessary to build the country’s resilience to external shocks”, while acknowledging that there are limits to the level of diversification that can be achieved by a small economy. like the Bahamas.
It was noted that more attention will be given to products and sectors based on locally available raw materials, such as other marine products, selected agricultural products such as cascarille or creative industries.