Boston, MA -- (SBWIRE) -- 11/07/2013 -- Despite the widespread economic downturn, the Caribbean tourism industry has survived, albeit not entirely unscathed. However, the region is once again showing an increase in arrivals and a moderate growth across industry value. Increasing investments in the hotel sector as well as in international transport means have also begun to see results as a number of projects under development have come to fruition.

The report considers the impact of the continuing global economic uncertainty on the Caribbean tourism industry, and how the region's ongoing fiscal issues are affecting its tourism arrivals. Many Caribbean economies enjoyed relatively strong headline growth in the mid- to late-2000s on the back of rising financial services intermediation as well as robust tourist industry activity, but both of these trends have begun to fade, and we have reason to believe that they will continue to do so in the years ahead, weighing on economic activity and preventing more rapid decline in the unemployment rate. Financial services intermediation in the Bahamas as a percentage of GDP roughly doubled to just over 7.0% from 2002 to 2011, but we believe that this sector will face growing headwinds amid a stricter regulatory environment.

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Tepid economic growth in the UK, a contraction in real GDP in the eurozone and only a moderate improvement in US private consumption are anticipated over the coming quarters, and we believe that disposable income and spending on travel in these economies will also likely to remain somewhat depressed. As a result, we expect sluggish tourist industry growth will contribute to a higher unemployment rate than we had originally forecast in the years ahead. .

While we expect weakness in the tourism industry, we acknowledge the potential for an upside surprise that could lead to higher levels of employment. We believe that risks to US private consumption are currently weighted to the upside, implying that tourist arrivals could exceed our expectations over the medium term, as stronger income growth leads to higher spending on travel. However, we expect that the impact on the total unemployment rate for the Bahamas will be moderate at best.

Recent developments in the sector:

- In 2014, Royal Caribbean Cruises will launch Quantum of the Seas, followed by Anthem of the Seas in 2015, each designed to carry over 4000 passengers. These will be part of the new Quantum class cruise liners, with a third ship set to be delivered in 2016. Given the high level of competition, cruise liners are not only competing in the routes they cover, but also their line-up of on-board facilities and entertainment.

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