Economy shrinks for second straight quarter

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  • Imports rise: an increase in the value of goods imported into Bermuda had a downward impact on GDP in the fourth quarter of last year

    Imports rise: an increase in the value of goods imported into Bermuda had a downward impact on GDP in the fourth quarter of last year

Bermuda’s economy slipped back into recession — at least by one widely used definition — in the last quarter of last year, according to figures released by the Department of Statistics today.

In the fourth quarter of 2016, gross domestic product fell 2.4 per cent after inflation compared to the same period a year earlier, following a 1.8 per cent contraction in last year’s third quarter.

Recession is often defined as two consecutive quarters of negative real GDP growth. Bermuda emerged from a six-year recession when it returned to growth in 2015.

However, Ministry of Finance forecasters expect last year’s second-half dip to be short-lived. In the National Economic Report published in February, they predicted economic output would grow by between 1.5 and 2 per cent for 2017.

Today’s release said GDP in the fourth quarter of last year totalled $1,442.9 million, up 0.2 per cent from the same period in 2015 — or down 2.4 per cent after inflation.

Gross capital formation, defined as investment in fixed assets for use in production, was up by $26.8 million. This reflected higher investment in assets such as telecommunications equipment and industrial machinery.

Household consumption rose slightly to $817.8 million year-over-year, reflecting increased expenditure on air transport and catering services. However, after inflation households spent 1 per cent less.

Government consumption fell to $237 million, down 1.7 per cent from a year earlier, or down 3.3 per cent after inflation, due mostly to lower public expenditure on goods and services.

The island’s net trade surplus fell by $27.5 million, or 12.5 per cent, primarily because of a $37.5 million increase in payments for imported goods and services. Although such increasing demand indicates strength in an economy, the growth in the value of imports has a downward impact on GDP.

An increase in spending by tourists helped to boost the island’s receipts from the export of goods and services by more than $10 million.

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Published May 4, 2017 at 2:06 pm (Updated May 4, 2017 at 4:29 pm)

Economy shrinks for second straight quarter

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