Iran war could erode Bahamian growth and reserves as election race tightens
The electoral race in The Bahamas appears to be tightening, with the traditionally sleepy advance poll held last week for essential government workers such as police, and importantly seniors (the latter a traditional key opposition Free National Movement ((FNM)) voting bloc), seeing extremely high turnout. Some have compared this to the energy for change seen in 2017, which led to a change in government. This has been taken as a sign in some quarters that the now traditional one-term-only voter view (change the politicians in charge every five years) model of Bahamian politics may continue, as the FNM continues to gain traction.
In other news, US rating agency Fitch issued an updated report on The Bahamas on April 10, which, while it did not change the country's BB- rating, unsurprisingly projected a continued GDP growth slowdown to 2.2% in calendar year 2026, compared with 2.8% in 2025, and 3.4% in 2024. Growth risks were also projected as skewed to the downside due to the energy shock and its potential impact on an already slowing tourism industry—the pandemic rebound has ended and the industry faces real capacity constraints. Nevertheless, Fitch estimates growth at above potential of 1.5%, and the pre-pandemic annual average of 1%.
Tourism had reached a record high of 12.5 million visitors in 2025, or an 11.5% increase on the back of the recovery and subsequent expansion of the cruise industry. While growth may continue depending on US economic strength and the length of the Iran war, it will be much slower. Air arrivals had already fallen last year, and the still growing lower-value-added cruise segment may slow as well.
Fitch seems surprisingly sanguine regarding the fiscal deficit, arguing the 0.5% deficit for fiscal year (FY) ending June 2025 (FY 2024/2025) will be followed by a similar 0.5% deficit for 2026 (rather than the projected 0.5% surplus).
In this report, we review the economic, fiscal and political prospects for The Bahamas, as well as developments in the Fiscal Responsibility Council and the electricity sector, among others.
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