Government officials have forecast that the Bermuda economy will expand 3.5 per cent to 4 per cent in 2025, driven by international business, tourism, renewed investment in public infrastructure and their own Economic Development Strategy.

Some 88 per cent of EDS action items from last year are said to be on track for initiatives aimed at growing and diversifying the economy, attracting foreign direct investment and fostering job creation.

External risks remain a threat with high interest rates still being felt, tightening financial conditions, reducing consumer spending and slowing investment and housing markets.

While the 2024 National Economic Report of Bermuda said the island’s economy is on track for growth in 2025, a weakening of global demand could spill over and spoil things, particularly our reliance on tourism and imported goods.

“At the same time,” it said, “inflation appears more persistent, partly due to rising tariffs. Increases in bilateral tariffs could raise the cost of imported goods, leading to higher retail prices for consumers and greater operational costs for businesses in Bermuda.

“Additionally, elevated global trade costs may dampen economic activity in key partner countries, especially the US, indirectly affecting Bermuda through reduced tourism, lower investment inflows and potential supply chain disruptions.

“If US firms pass on higher input costs, Bermudian households and businesses may face further price pressures, reduced disposable incomes, and narrowing profit margins.

“To mitigate these risks, the Government will focus on diversifying its trade partners and deepening relationships with existing partners to reduce reliance on a few key markets.

“Additionally, investing in workforce skills development and improving productivity, while maintaining fiscal flexibility, will enable Bermuda to better navigate global uncertainties and support long-term economic stability.”