The Bahamas - Overview of economy



Tourism and financial services dominate the economy of the Bahamas. Tourism is the main economic sector, accounting for 60 percent of the gross domestic product (GDP) and employing almost half of the population. The government has undertaken extensive marketing to attract visitors and bring foreign investment to the tourist vacation industry. The importance of tourism to the Bahamas makes the nation reliant on the economic fortunes of vacation-oriented nations, particularly the United States from where most of its visitors come.

The country has benefited from its status as a tax haven and international banking center. To exploit this advantage, the Bahamian government has passed laws aimed at encouraging foreign companies to incorporate themselves there, and has created free trade areas where goods can be trans-shipped without being taxed. Many shipping firms use the Bahamas to register their vessels.

The mild climate of the islands and their proximity to the United States make the Bahamas an ideal tourist destination for Americans. It is also ideally situated for American companies to relocate to avoid U.S. corporate taxes. The nation is also aided by its history of political stability and the sound infrastructure of the main islands. However, the geographical position of the archipelago makes it vulnerable to natural disasters such as hurricanes and tropical storms.

A negative effect of the Bahamas' proximity to the United States is that international criminals often use the country as a base for their activities. The main criminal activities involve smuggling of illicit drugs, illegal immigrants, and money laundering . The government cooperates closely with the United States, which provides substantial aid in anti-narcotic initiatives, in attempting to counter these problems.

The nation has a small fisheries industry and exports limited quantities of lobster and other fish. The main manufacturing company is PFC Bahamas, which makes pharmaceutical products. BORCO maintains an oil refinery in the islands and several breweries in the islands produce rum and assorted beers for export to the United States and Western Europe. Freeport has repair facilities for cruise ships.

The Bahamian government has tied its currency to the U.S. dollar, which has helped maintain economic stability. The country has been the recipient of generous foreign aid that includes bilateral assistance from nations such as the United States and the United Kingdom, and multilateral aid from organizations such as the European Union (EU).

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