Bermuda’s economic recovery gathers pace

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  • Picking up pace: an increase in international business compensation was one of the factors behind the acceleration of economic growth in the third quarter of last year

    Picking up pace: an increase in international business compensation was one of the factors behind the acceleration of economic growth in the third quarter of last year

Bermuda’s economic growth is accelerating, according to the latest government figures.

Gross domestic product in the third quarter of 2015 was $1.35 billion — up 6.3 per cent on the same period in 2014.

Real GDP growth — that is, adjusted for inflation — was 4.4 per cent. It was the fourth successive quarter of real GDP growth, coming out of a six-year recession.

After real GDP growth of 1.5 per cent in the first quarter and 1.6 per cent in the second, it puts Bermuda firmly on track for its first year of economic growth since 2008.

The low global price of oil helped to boost third-quarter growth, as Bermuda spent less on fuel, contributing to a 13.5 per cent fall in the amount paid for imported goods. This added nearly $32 million to the Island’s trade surplus.

A 3.5 per cent increase in exports of services also helped, as a result of increased compensation for employees in international business and reinsurance premiums sold to overseas customers.

Exports of services totalled $644 million in the third quarter, up by almost $22 million from the $622.2 million recorded in the same period of 2014.

The value of imported goods fell to $207.5 million from $239.2 million, thanks mainly to a slump in fuel costs.

The price of US crude oil fell by more than 50 per cent between the third quarter of 2014, when it was more than $100 a barrel, and a year later, when it was around the $45 mark.

Bermuda residents have seen the benefits in the form of a lower fuel adjustment rate on their electricity bills and cheaper fill-ups at the gas station.

The Bermuda economy looks set to continue into this year, with global oversupply continuing to drive the crude oil price lower. Today oil was trading at around $33 a barrel in New York.

The GDP statement from the Department of Statistics added that household consumption increased 3.8 per cent to nearly $779 million in the July-through-September period, reflecting greater expenditure on durable goods such as motor vehicles, non-durable goods such as food purchased in stores and services such as accommodation and catering. After adjusting for inflation, household consumption rose 2.7 per cent.

?Government consumption weakened 0.3 per cent to $238.6 million, thanks mostly to lower spending on goods and services. After adjusting for inflation, government consumption fell 1.1 per cent.

Investment in fixed assets fell by about $1 million to $163 million. While investment in cosntruction rose by $2 million to $88.3 million, investment in machinery and equipment fell by $2.8 million to $74.6 million. In real terms, gross capital formation contracted 1.4 per cent.

The trade surplus grew by $53 million, or 45.2 per cent.

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Published Jan 9, 2016 at 8:00 am (Updated Jan 9, 2016 at 8:44 am)

Bermuda’s economic recovery gathers pace

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