Bermuda hit harder than most in global recession, says BMA researcher
A researcher at the Bermuda Monetary Authority (BMA) says the global financial crisis has hit Bermuda harder than the rest of the world.
Dr Marcelo Ramella is the deputy director of policy, research and risk at the BMA. Hes a CPA, has an MBA from the University of Milan, a has earned a PhD and fellowship from the London School of Economics and Political Science.
Dr Ramella says that while international regulatory bodies have monitoring the crisis and making changes to the global financial system, we arent out of the woods just yet.
A lot has been going on but on the other hand reform takes time and its very early days, he said during the Hamilton Rotary Club meeting yesterday at the Royal Hamilton Amateur Dinghy Club. The most difficult part is that the crisis is still unfolding so theyre facing a moving target.
Theres a big crisis out there. It started, we havent seen the end and it is hitting the world economy and individual countries economies.
Dr Ramella says Bermuda is not immune to the global economic crisis and is still suffering the after-effects.
Weve seen a three-year drop in GDP and thats, for all intents and purposes, a recession, he said.
While Dr Ramella did not use the word depression at all during his lecture on the global financial crisis and its affects on Bermuda, he did say Bermuda, in his opinion, has been hit harder than many other countries.
If we compare the three- or five-year drop in Bermuda with the world GDP, we can see that yes, the world GDP did drop in 2009 but it picked up. But it didnt pick up in Bermuda — thats a worrying signal. We can tell that the crisis is hitting Bermuda harder than the rest of the world.
The likelihood is that Bermuda will be siding closer to Greece or Portugal than to the UK or Germany — probably not a benchmark we want to be proud of, he said.
Dr Ramella said its not surprising to see such high unemployment in Bermuda considering the state of the nations GDP and government debt and that if those two things dont improve, residents on the Island can expect more of the same.
As GDP falls, employment falls. Filled jobs over the past five years have a drop by the thousands. Hundreds of those are international business jobs.
In 2011, in a contracted economy, not surprisingly, we were also importing less — we saw that in the retail volume going down. But employee compensation was going down as well — by about $400 million. Thats less hard currency thats coming to the island to pay for the goods. And thats worrying.
While Dr Ramella says Bermuda needs to bring in more hard currency to boost GDP and pay off debt, he offered only a very vague strategy on how to attract that currency.
Concentration on one sector of the economy makes you vulnerable, he said. Its going to take a little effort to convince that diversification here is a good thing.
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