There has been a lot of talk in the US that there are now small signs of recovery in the global economy.

That does not mean that the recession is over – far from it. But the suggestion is that although there will be more job losses and contraction, the rate of decline is slowing down and the recession bottoming out.

If only the same were true for Bermuda. Here, despite some fairly dramatic slowdowns already, there are still signs that the worst is yet to come.

That's not to say that there isn't some good news, but for the most part it is a by-product of economic decline.

So here's the good news, such as it is: The rate of inflation, which has been soaring at around five percent for months, plunged to half that level in March as declines in electricity prices finally kicked in.

That will bring much needed relief to individuals and businesses alike, who have grappled with declining business or wages and rising prices at the same time.

Similarly, the weakness of the economy and the lack of confidence has also finally reduced the amount of shopping abroad, which will be some solace to the Island's battered retailers.

It probably won't be enough, however. The value of retail sales in March fell for the sixth time in the last seven months. And more importantly, the volume of retail sales, once inflation is factored out, fell for the 11th consecutive month.

In March, only two sectors of the retail economy saw growth, building supplies, which bucked a trend and jumped, and food sales, which rose, but not by as much as the stubbornly high rate of inflation for food alone. That food prices continue to rise in price is something of a mystery. While people still have to eat in a recession, many of the elements that make up food prices, such as wages and fuel costs, should be flat or falling. So this worldwide trend is a mystery.

What is of most concern is the forecast made by Construction Association of Bermuda president Alex DeCouto who warned last week that there were few major construction projects planned for the rest of the year. That means that as current big projects wrap up, work in this critical sector of the economy is going to dry up.

Just what is happening in tourism will become clearer when Premier Dr. Ewart Brown announces the first quarter figures in the next few weeks, but the likelihood is that the news won't be good. And despite claims to the contrary, the likelihood of major projects getting seriously underway in 2009 still seems remote.

And although the insurance sector has held up surprisingly well in the current recession, it certainly is not hiring. Other segments of international business have done less well, notably investment funds and fund administration. All of this has an impact on employment and the overall economy.

What is still needed, apart from the courts building and the Government housing projects already underway, are some "shovel ready" public projects that will genuinely improve the Island's infrastructure while maintaining employment.

But the difficulty is twofold. Projects like a new Causeway or hospital are still on the drawing board, but there would be work, like new Government offices and the National Sports Centre that could be brought up to speed quickly.

The second problem concerns financing. Bermuda has already blown through its old debt ceiling, and along with concerns about international business, this has affected the Island's credit rating. So borrowing money to engage in these kinds of projects will be difficult.

That is the problem the Government faces. It needs to focus resolving it before the economy weakens further.