Stable Democratic Government: 

The Bahamas offers potential investors a peaceful and stable democratic environment with a strong commitment to the rule of law.

Tax Relief: 

The country offers relief from taxes on personal income, inheritance, capital gains, corporate income, and other taxes related to dividends and interest.  

Tourism and financial services are the main economic drivers: With a limited industrial sector, the Bahamian economy is heavily dependent on tourism and financial services.  These sectors have traditionally attracted most of the Foreign Direct Investment (FDI), and investment is encouraged by the government.  Tourism and related services contribute approximately 70 percent of the country’s Gross Domestic Product (GDP), attract most of the Foreign Direct Investment (FDI), and employ just over half of the workforce.  The economy is experiencing a rebound according to a May 2023 labor force survey and unemployment is stable at 8.8 percent.  The Bahamas is expected to break the eight million visitors mark in 2023 with 85 percent of visitors coming from the United States.  Financial services, including a growing cryptocurrency sector, is the second most important driver of the economy, accounting for 15 percent of GDP.  To diversify the economy, the government has targeted investment in light manufacturing, technology, agriculture, fisheries, extractive industries, and renewable energy.  The government has also committed to digitizing business services and jumpstarting domestic productivity through small and medium enterprises (SMEs), especially those operating in non-traditional sectors.  Grand Bahama, the most northern Bahamian island, depends less on tourism and has the most diversified economy of any island in the country.  Its capital, Freeport, is a free trade zone featuring many U.S.-owned businesses.    

Economic Performance: 

he World Bank recognizes The Bahamas as a high-income, developed country with a GDP per capita of $31,458.3 (2022).  However, the designation belies the country’s extreme income inequality, as statistics are driven by a small percentage of high-net-worth individuals, while most Bahamians earn far less.  The World Bank estimates real GDP growth of 4.3 and two percent in 2023 and 2024 respectively.  Despite, increased debt, and global inflation due in part to the Russian invasion of Ukraine, the debt-to-GDP ratio dropped to 85% percent (June 2023) notwithstanding the national debt increase of $457.5 million over the prior 12 months to $11.645 billion.  The government is actively working to address this situation through fiscal consolidation measures and prudent debt management strategies.  The sovereign credit rating holds a moderate level of creditworthiness, with ratings such as BBB-/Baa3 from major credit rating agencies. 

Economic Outlook: 

In 2023, The Bahamas is projected to experience a solid economic growth trajectory.  The country’s GDP is expected to expand by around 4.3%, driven by the recovery in the tourism sector.  GDP is poised for a milestone achievement, as it is projected to reach a record high of $13.7 billion in 2023.  This significant historical growth reflects the country’s efforts to revitalize the economy after a period of challenges.  The surge in GDP can be attributed to several factors, including recovery of the tourism sector, infrastructure investments, and diversification initiatives.  The government reports a strong pipeline of investment proposals in tourism, renewable energy, airport and infrastructure development, and agriculture.  While the economic outlook is positive, it is crucial for the government to continue managing the debt burden, maintaining a stable credit rating, and diversifying the economy. 

Close ties to the United States: 

The United States and The Bahamas share deep political, economic, and cultural ties.  The Bahamas is an English-speaking country with a population of approximately 400,000, with extensive air, maritime, and communications links to the United States.  There are approximately twenty-five daily flights between The Bahamas and the United States.  U.S. Customs and Border Protection operates a pre-clearance facility in Nassau offering ease of travel for the approximately eight million tourists each year.  Strong business ties grant U.S. companies access to local markets. 

Trade preferences are available: 

The Bahamas is a member of the Caribbean Community (CARICOM), a beneficiary under the United States’ Caribbean Basin Initiative (CBI) and the Caribbean Basin Economic Recovery Act (CBERA), and Canada’s CARIBCAN Program.  The country is also party to the Economic Partnership Agreement (EPA) between the European Union and the countries of the Caribbean Forum (CARIFORUM) and the EPA between the United Kingdom and the countries of CARIFORUM.  These agreements provide preferential access for goods produced in The Bahamas to most major markets, which benefits American investment in the export economy.  The Bahamas drafted a National Trade Policy in 2022 focused on managing imports, expanding exports, diversifying exports, and strengthening domestic competitiveness, as well as leveraging opportunities from existing trade agreements and preferences, including CBI and CBERA.

The city of Freeport on the island of Grand Bahama is a 233 square mile Free Trade Zone.  The Hawksbill Creek Agreement (1955) between the Bahamian government and the Grand Bahama Port Authority (GBPA) - a privately owned organization that oversees the city of Freeport - guarantees that the “special economic zone” can continue to exist until 2054.  Businesses operating in Freeport are exempt from most central government taxes (real property, excise, import, and business taxes) and subject to licensing by the GBPA.  Additionally, in the aftermath of Hurricane Dorian in September 2019, both Abaco and Grand Bahama were declared Special Economic Recovery Zones (SERZ), which allows residents and businesses to benefit from several additional tax exemptions and incentives.  These concessions were recently renewed until 2025.

Strong U.S. market share: 

The United States remains The Bahamas’ main trade partner with over 85 percent of imports coming from the United States.  United States exports to The Bahamas were valued at $5.6 billion in 2022, resulting in a $3.9 billion U.S. trade surplus.  Most Bahamians are familiar with American products given frequent travel to the United States and access to U.S. cable TV.  Other main trading partners include China, the United Kingdom, Japan, Panama, Switzerland, Canada, and France.  

Political Environment

For background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas website.