The economy is overheating and the Government has no plan, other than gloating, to address the problem of excessive aggregate demand.

That is according to economic expert Craig Simmons, who data shows that economic growth is only possible with rising inflation and that as growth accelerates, so too does inflation.

On Friday, The Royal Gazette reported that Bermuda topped the tree with the highest gross domestic product (GDP) per capita in the world after it soared by 10.3 percent.

The Island generated $5.35 billion of wealth in 2006, equating to $83,935 per person, according to the latest Department of Statistics report, which also showed that Bermuda underwent its strongest growth performance over the past ten years.

The Island is now in the number one spot for GDP per capita at the end of 2006, climbing from an expected total of $69,900 in 2005 and surpassing former leader Luxembourg's expected GDP of $71,400 for the same year.

Gross Domestic Product (GDP) can be interpreted as the value of goods and services produced by people and firms resident in Bermuda, or, alternatively, the total income earned by residents and their on-island business activities.

But Mr. Simmons, who lectures in economics at Bermuda College, said the findings only confirmed that the economy is overheated and that Government has no plan to deal with the problem of excessive demand.

"The data shows that economic growth is possible only with rising inflation and that as growth accelerates so too does inflation.

"Over the last five years, growth has come at the cost of a more than doubling in the rate of inflation from 2.1 percent to 4.7 percent, as measured by the GDP implicit price index (IPI).

"The IPI is superior to the consumer price index (CPI), because it accounts for economy-wide inflation, not just a narrow basket of goods and services."

And he said inflation is the root of the problem and has widened the gap in terms of the difference in the standard of living between professionals and managers, and those blue collar workers.

"Inflation is particularly insidious because it erodes the purchasing power of the most vulnerable: pensioners and blue collar workers in the hospitality, transportation, construction, wholesale and retail sectors," he said. "In spite of strong economic growth over the last ten years, blue collar workers' wages have not kept up with inflation. As a result, there is a clear distinction between the standard of living of those who work in professional, technical and management occupational groups and those who work in blue collar and clerical groups.

"There is no doubt that the opportunities available to Bermudians are greater today than in the past, but for the working class, it is difficult to see how they have benefited from the unanticipated and unprecedented growth of 2005 and 2006."