International business is now the key pillar of the economy with far reaching benefits for Bermuda, according to figures published in the 2003 Economic Review yesterday.

At the end of 2003, there were 13,509 international companies registered in Bermuda, an increase of 1.4 percent or 191 companies and in 2002 these companies spent an estimated $1.05 billion, a 6.5 percent increase over the $986 million recorded in 2001.

"There figures demonstrate that the international business sector is the pillar on which the Bermudian economy stands," said the report, which was issued alongside the 2004/5 Budget yesterday.

The same report, which looks back over the most recent statistical data available and includes previously unreported statistical data on the economy for 2002 and some of 2003.

And international business shows the highest growth and the most promise with 1,025 new exempted companies incorporated in 2003.

For the first six months of 2003, the foreign earnings of the international companies ? such as ACE and XL (pictured) ? increased by $49 million to $541 million.

And the sector directly employed 3,781 people, an increase of 189 workers over 2002.

Minister of Finance Paula Cox said during her Budget speech yesterday: "The fundamental nature of our economy has changed and it continues to evolve before our eyes.

"During the last decade in the 20th Century, employment in hotels, restaurants and other travel-related establishments declined significantly. In contrast, the expansion of financial services and international business generated sufficient jobs to accommodate our growing labour force."

And Ms Cox painted a rosy picture of the economy for 2003, and despite being battered by Hurricane Fabian, the Island came out on top of the year.

She put the estimated gross domestic product for 2003 at $3.9 billion, an increase of 2.5 percent, compared to $3.7 billion a year earlier, an increase of 2 percent.

In the Economic Survey, details of 2002 GDP were published for the first time. It showed that GDP per capita stood at $59,864 (based on the latest population figures of 62,059).

"International business contributed the greatest amount to the growth of the Bermudian economy," said the review about 2002, adding that the sector contributed $593 million in output, which equated to 15.8 percent of GDP.

Real estate and rental weighed in at $484 million or 12.9 percent while tourism came in eighth largest to total GDP at $237.7 million after a 4.6 percent decline in real terms during the year.

Overall in 2003, the economic review said that employment stood at at 37,634, a decrease of 0.4 percent or 134 jobs. And inflation averaged out during the year at 3.2 percent, much higher than in the US, UK or Canada.

But this was downplayed by Ms Cox during her Budget speech. "Bermuda's rate of consumer price inflation averaged 3.2 per cent in 2003, not very different from some G7 countries.

"Bermuda's rate was driven by higher than average increases in fuel costs, health care services and education costs for private schooling in Bermuda and overseas university programmes. "

And while international business may have taken over from tourism as the main power behind the economy, Ms Cox was not giving up on the sector.

She said: "While the international business sector has grown in importance, the tourism sector remains as the largest and most diversified provider of jobs to a wide range of Bermudians.

"Therefore it is vital that the tourism industry is sustained. Further, there is a symbiotic relationship between the twin pillars of our economy. In very simple terms, the continued growth and development of the international business sector is absolutely dependent upon a healthy and profitable tourism sector. Therefore Government will continue to support and assist the tourism industry in regaining its point of equilibrium in the 'New Bermuda'."

Figures for 2003 showed that visitor arrivals were down by 1,360 or 0.2 percent with air visitors, the main spenders among the visitor groups, down by 9.6 percent to 256,575.

"As tourism is a key pillar of our economy that employs large numbers of Bermudians, Government is working assiduously towards improving Bermuda's tourism product," said Ms. Cox. "The challenge now before us is to regain the lost ground in tourism."

Also included in the figures was the fact that there was a current account surplus of $26 million by end of June 2003, stating that it was expected that the year finish with a surplus in that account.

And they also revealed that the Bermuda money supply rose to $3.126 billion by the end of June 2003, up 11.9 percent year over year.

Ms Cox said that the economic story of Bermuda in 2003 can be summed up by the impact of Hurricane Fabian

The overall damage was estimated at $160 million to $180 million and Bermuda's hospitality sector suffered substantial property damage to hotels, restaurants and golf courses.

The hotel sector lost, albeit temporarily, some 20 percent of its capacity ? about 1,200 beds. As a result, there was a rise in short term structural unemployment in the sector with a negative knock-on effect to related sectors of the economy, said Ms Cox. And she spoke of the devastation of agriculture and the cost to farmers who had lost their crops.

She said: "The good news is that we weathered the storm. The even better news is that notwithstanding the ravages of Hurricane Fabian, the economic outlook for 2004 is promising."

And she added: "We consider that as Government, we have steered the economy through the stormy waters of recession to calmer seas."