Economically speaking, Bermuda is emerging from a largely painful decade and all residents will hope that 2020 can herald a new era of sustained economic growth.However, such success would have to be achieved against the grain of demographics, with the island’s workforce on track to shrink as scores of baby-boomers retire over the next few years: one in four will be a senior by 2026, government projections show.Without people with the right skills to replace them, the island’s economic engine is likely to stutter rather than accelerate.And with more seniors drawing out of the system, while fewer working people pay into it, the risks to the fiscal stability of an already heavily indebted Government are very real.If 2019 was the year in which BermudaFirst started the conversation on changing the path we’re on by proposing sweeping reforms, then perhaps there is hope that 2020 will be the year that the talk turns to action.As a non-political body of 80 Bermudians from different walks of life, commissioned by David Burt, the Premier, to draw up a socio-economic plan to meet the island’s future challenges, BermudaFirst’s proposals deserve to be taken seriously. Immigration reforms to ensure the island can draw on the global talent necessary to maintain a strong, 21st-century economy, education reforms to best equip all Bermudians to participate in that economy and moves to create a sustainable healthcare system are all part of their plan to ensure the prosperity of Bermuda and Bermudians.Politics has proved a barrier to progress on these fronts, with 2019’s aborted attempts to table legislation on immigration reform a good example of how difficult it is to change the status quo when it involves making decisions that may be unpopular with many voters.But as Peter Heller, of the Fiscal Responsibility Panel, warned in an interview with The Royal Gazette: “The status quo will not deliver a good future for Bermudians or their children.”Philip Butterfield, the chairman of BermudaFirst, will not shrink from pestering government ministers to make progress on the critical issues. He has vowed that his group’s Future State report was not an ending, but a beginning, and he believes transformative change is critical for a sustainable future economy. Many would agree him.Gross domestic product, a measure of economic activity, has been growing over the last three years, with much help from short-term factors, such as the America’s Cup and construction of the new terminal at LF Wade International Airport and work on hotel renovations and newbuilds, as well as Belco’s new North Power Station. The 3.6 per cent real GDP growth in 2017 was followed by 0.1 per cent growth in 2018, and quarterly reports for the first half of 2019 showed the economy growing at a more than 3 per cent clip, aided by the value of construction work put in place.These numbers will mean little to many struggling workers and businesses, weighed down by increasing taxes, rising healthcare costs and Bermuda’s high cost of living and doing business, who may argue that GDP is not a great measure of the health of the economy when it comes to the lot of the average Bermudian.Certainly there are indications that many have been tightening their purse strings. Not only did retail sales decline year over year for 16 months out of 18 through August 2019, but quarterly GDP reports show household consumption on a declining trend since the start of 2018.As for businesses, their outlook has become increasingly pessimistic. The Bermuda Business Confidence Index plunged 23.6 points to an all-time low of 62.8 last year, having dropped 19 points in the survey before that. Fewer than one third of the business leaders surveyed said they were confident in the island’s economic future, suggesting that much of the private sector is focusing on survival rather than looking to invest and hire.Respondents’ top answer when asked for changes that would improve the business environment? Immigration and work permit processing. On the bright side, when the large construction projects are complete, their products will continue to contribute to growth. The new airport terminal, scheduled to open this summer, may help to boost employment with its restaurants and retail outlets, while the airport will be better equipped to cope with more flights and passengers. Greater airlift would provide a further fillip to the tourism industry, which has been on a growth spurt in recent years, helped by factors such as the rapid growth of online rental accommodation, particularly through Airbnb, the America’s Cup and its legacy, and the effectiveness of the Bermuda Tourism Authority. The new St Regis Hotel in St George’s is slated for a 2021 opening, creating dozens of new jobs in the sector with the arrival of 97 more hotel rooms and 25 suites.Bermuda’s entrepreneurial spirit also offers hope for the economy, especially given the escalating efforts to support those with business ideas. The Bermuda Economic Development Corporation is more empowered than ever to help small businesses. And the private-sector business accelerator Ignite, which emerged in 2019 with impressive early success, is doubling its intake of budding entrepreneurs in 2020.The Bermuda Government’s efforts to build a new fintech industry on the back of a pioneering regulatory framework for digital assets is proving to be a slow burner. The Premier told the House of Assembly in late September that eight fintech companies had established offices on the island and 31 people worked in the industry, 15 of them Bermudian.There are reasons to expect some acceleration in 2020, not least the level of support Bermuda has from influential innovator-investors, who featured in last October’s Tech Week.Jeff Pulver, voice-over-internet-protocol pioneer, believes the island will be rewarded for embracing innovators in a way that few other countries have. He said Bermuda could develop a thriving “start-up economy” over the next decade with a community of innovators using technology to tackle the world’s challenges in many sectors.Cormac Kinney, a celebrated entrepreneur and software designer with a lengthy track record of successful start-ups and technology businesses, is equally enthusiastic about the island and is setting up an electronic diamond trading exchange here that already has commitments from 32 of the world’s top diamond companies.The Government’s pioneering electronic ID initiative could grab further attention from innovators. The island’s openness to digital assets comes against a backdrop of moves towards making cryptocurrencies more mainstream. The European Central Bank, for example, is considering launching a “stablecoin” that could have a serious implications on the businesses of intermediaries like banks and payment-processing companies.Bermuda’s international insurance industry has held up remarkably well over the last couple of years, despite fears over the impact of a wave of mergers and ever-growing international pressure against offshore financial jurisdictions.US tax reform that took effect at the start of 2018 has proved to be far from the doomsday scenario that some had feared, while the loss of jobs from the many takeovers in the property and casualty re/insurance business has been offset to some extent by strong growth in the life reinsurance and annuities businesses and the insurance-linked securities side of the industry.In 2019, economic substance rules, introduced to tackle European Union concerns about offshore shell companies used to avoid paying taxes in the countries where they make their money, were the new concern. Companies who lack the required substance on island, in terms of employees, physical presence, local spending or revenue-generating activities, will have a choice of leaving or ramping up their presence. It is too early to say whether the result will be a net gain for Bermuda’s economy, however there has been no mass exodus so far. Indeed, by the end of the second quarter of 2019, there were just as many international businesses registered in Bermuda as there were 18 months earlier.However, more international pressure is sure to be brought to bear in 2020. The Organisation for Economic Co-operation and Development is leading the way with its “Pillar Two” proposal, designed to establish a minimum global rate of taxation for multinational companies.In its Pillar Two consultation document, the OECD states: “A minimum tax rate on all income reduces the incentive for taxpayers to engage in profit-shifting and establishes a floor for tax competition among jurisdictions.”The aim seems to be to give multinationals as few reasons as possible for basing entities in places like Bermuda. And even though the main targets are surely the tech giants whose internet-derived earnings have proved difficult to tax under laws that have failed to keep pace with the digital age, other industries will be captured in the crosshairs. Reaching international consensus on how taxes should be allocated between nations would seem ambitious, particularly with countries like France and Britain having already gone it alone on imposing sales-based digital taxes, but we will know more by the end of this year about the initiative’s chances of becoming reality.Whatever else happens, external pressures will continue in 2020 and the demographic time bomb will keep ticking. What is not so certain is whether the Government and the people of Bermuda will be able to overcome protectionist tendencies to push ahead with the BermudaFirst-style reforms that surely offer us our best chance of prosperity.As the new decade dawns, the challenges are daunting and the time for kicking the can down the road is fast running out.