It’s time for some honesty
The Government’s main argument in defending its record on the economy has been that Bermuda’s economic troubles are caused by “the global recession”.
The One Bermuda Alliance has always disputed this view because our recession has been deepened and perpetuated by “Made in Bermuda” factors that have nothing at all to do with global conditions.
Our Shadow Finance Minister ET (Bob) Richards has led the way on this front, showing steady declines in Bermudian-held jobs well before the 2008 recession and citing Government policies and attitudes that led to job losses in the international business sector and the wider community.
We have also been very critical of the Government’s debt and its soaring cost, which has caused the Government to cut back services and jobs — cutbacks that are hurting people every day.
Today, I’d like to shed new light on this disagreement about the source of our economic problems using the Government’s very own data to show that Bermuda’s recession is very much a home-grown problem.
But first it’s important to understand two terms:
l The first term is Gross Domestic Product (or GDP). This is a measure of an economy’s total economic output, meaning all the goods and services it produces in a given period, usually a year. The GDP reflects not just the size of an economy but its health. A growing GDP is a sign of a healthy economy; a declining GDP reflects an economy in trouble.
l The second term to understand is the word recession. A recession is generally defined as two consecutive quarters (six months) of decline in GDP.
Two tables on page 51 of a document the Government used last week to sell $475 million in Government bonds shows Bermuda’s recession to be much deeper than global conditions set by our major trading partners.
In country-to-country comparisons across 2010 and 2011, Bermuda performed worse than everyone else in terms of Gross Domestic Product; worse than Canada, Cayman, Aruba, The Bahamas, Barbados, Aruba, the United States and others.
The statistics show the rest of the world is doing better than Bermuda, and that begs the question: If the cause of our problems is “the global recession”, as the Government says, then why are we doing worse than all other countries?
The answer is that Bermuda has been making its own recession. The other answer is that recession has been beaten back in the countries we do business with, with the exception of the UK.
Let’s look at a couple of countries to see what we mean.
The United States is Bermuda’s largest trading partner — responsible for more than 80 percent of all of our trade. From 2010 to 2011, the US GDP grew by 4.7 percent.
In those same two years, Bermuda’s GDP fell 3.9 percent.
Canada is another country with which Bermuda has strong business ties. In 2010 and 2011, its GDP rose 5.7 percent.
These two countries account for almost all the business Bermuda conducts with “the world”. Not only have they not been in recession since 2010, they are in fact in a period of recovery and growth. Yet Bermuda has been heading in the opposite direction.
Bermuda’s performance over the last few years becomes even more disturbing when we look at Caribbean nations, many of whose economies, like Bermuda’s, depend on tourism and international business. In them, we see countries whose economies are growing, not declining.
And, more to the point, some of the countries that suffered severely in 2010 got their act together in 2011 to end their recessions.
Cayman is one example. In 2010, its GDP contracted 3.4 percent. But in 2011, it turned the situation around and grew its GDP by 1.2 percent. That means it was growing jobs, not losing them, as Bermuda continues to do.
I put forward these figures to make an important point:
Bermuda needs to have the best understanding of its problems if we are to make the right decisions to get this Island back on track. No one disputes that the economic upheavals of 2008 had a depressing effect on worldwide economic activity, but when you hear Government ministers say our economic problems are due to “the global recession”, they are misleading you. Our problems are not wholly due to “the global recession”. With the exception of the United Kingdom, the countries we do business with are not in recession.
As our Shadow Finance Minister has said time and again, we are in a Bermuda-made recession, and the contributor-in-chief to that recession is Government policies that have caused companies and jobs to leave the Island, spreading further jobs losses across the community.
The sooner we admit that — the sooner this government admits that — the sooner we can begin to make changes that will grow jobs and security for all Bermudians.
Craig Cannonier is Leader of the Opposition One Bermuda Alliance
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