Capital projects drive 3.3% real GDP growth
Bermuda’s economy grew during the second quarter of this year, thanks mainly to capital investment in projects including Belco’s new power station.
During the April-through-June period, gross domestic product rose 3.3 per cent year over year, after adjustment for inflation, to $1,145.3 million.
GDP also benefited from a 4.2 per cent increase in government consumption, due to an increase in wages and salaries.
Households, however, tightened the purse strings, with spending falling 2.4 per cent on items such as clothing, furniture, electricity, motor vehicles and accommodation.
It was the fourth successive quarter of real GDP growth and followed 3.4 per cent inflation-adjusted growth in the first three months of the year.
The Department of Statistics also reported on the balance of payments stating that the island’s current-account surplus, summarising its economic transactions with the rest of the world, narrowed to $161 million in the second quarter, down $29 million year over year.
A report by the Department of Statistics said the main driver of second-quarter GDP growth was the 74.5 per cent increase in investment in machinery and equipment linked to capital projects.
This category included generators related to the power station upgrade and two radar apparatuses. One radar was for the Bermuda Airport Authority’s Doppler Weather Radar System and the other was for the National Aeronautics and Space Administration’s Space Launch Tracking System.
Imports of machinery grew by $54 million, while imports of finished equipment grew by $17 million during the period, as the island’s goods account deficit grew to $358 million.
Gross capital formation related to construction registered a 11.8 per cent increase during the period reflecting a variety of projects such as office refurbishments, civil works such as road, dock and bridge refurbishments, as well as continued work on the power station construction, airport project and hotel development.
Household final consumption declined by more than 2 per cent, after adjustments for inflation, for the fourth quarter in the past five.
The value of imported goods rose 24.9 per cent, which had a downward impact on GDP. This was mainly due to the spike in machinery and equipment imports.
Exports of services rose 2.5 per cent during the period reflecting increased earnings from the export of travel services and insurance services which offset a decline in financial services receipts.
Imports of services rose 1.4 per cent due to construction and engineering services.
Services transactions realised a surplus of $191 million in the second quarter.
Bermuda’s primary account surplus was $374 million, reflecting balances on compensation earned or paid to non-residents, and income from investments and payroll tax paid by non-resident companies to the Government.
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