Bermuda’s gross domestic product (GDP) grew to $5.6 billion last year — the first increase for five years.

But after inflation is factored in the Island’s economy continued to shrink, falling 2.5 percent.

But the percentage drop was less than the 4.8 percent recorded for 2012.

Government statistics released yesterday showed GDP — the total value of goods and services produced in Bermuda — increased by 0.7 percent from 2012, before adjustments.

GDP per capita rose slightly to $85,747.

Economic activity grew 3.9 percent in the international business sector, which accounted for 25 percent of Bermuda’s economy.

But the economic contribution of companies offering support services to international businesses such as legal, accounting and management services continued on the downward trend they have followed since 2009, falling 5.3 percent in 2013.

Finance Minister Bob Richards said last night: “It’s in the area we expected it to be in — around flat. We didn’t think anything dramatic was going to happen for that year.

“We weren’t expecting anything except to stabilise the situation, which we have pretty much done.”

And he warned that it would take time for recovery to kick in.

He said: “A lot of the initiatives that we’re working on haven’t come to pass yet. It takes some lead time for these things to happen, then some more time to feel the effects.”

And Mr Richards added Government would continue to work towards creating jobs growth.

He said: “These will be manifestly obvious when we announce them.”

Household expenditure — driven mostly by demand for non-durable goods like food — went up by 0.7 per cent, while household expenditure on services also increased, up by 0.9 per cent.

The value added from real estate and rentals also declined, down 2.3 per cent, partly due to lower income earned from building rentals and smaller commissions.

And electricity and water suppliers also saw a drop — down 5.7 per cent and 5.8 per cent respectively.

Hotels and restaurants had differing fortunes. Hotels saw room sales advance nine percent, while their food and beverage sales also increased 14 percent.

But the restaurant industry struggled in 2013 — the sector showed a 10.2 percent decline in sales, which meant an overall 8.4 percent decrease in its contribution to Bermuda’s GDP.

Construction activity fell, as did the contribution of Government, which went down by five per cent as public services tightened their purse strings.

But car and bike sales went up for the first time since 2005, with garages experiencing a 2.7 per cent increase in activity last year.

Economics expert Peter Everson said: “Everybody appreciated that the economy was still contracting in 2013.”

He added: “From what I’ve heard from differing sectors of the economy, they are finding their answers to be slightly different.”

He said that he had spoken to real estate agents in the last week — who had signalled recovery.

Mr Everson added: “They said there was more activity — they weren’t talking about an upswing, but they said the contraction was finished as far as they are concerned.”

And he said: “The really interesting question is what the numbers for 2014 will look like.”