Finance Ministry expects fourth year of recession
The recession in Bermuda will last a fourth straight year through 2012, according to Government estimates of Gross Domestic Product (GDP).
The National Economic Report of 2011, released yesterday, estimated Bermuda’s GDP would “decline in the region of one percent to two percent” in 2012.
In previous statements Government had said it expected “a modest recovery” by mid-2012.
In yet another indication the downturn was much deeper than Government had projected, estimated declines in GDP confirmed the economy shrank for a third successive year in 2011, by 1.5 percent to as much as 2.5 percent.
That decline followed a 1.9 percent decline in 2010, when adjusted for inflation. The report noted official 2011 GDP estimates were not yet available.
Government had previously said it expected a contraction of only between 0.5 percent and one percent.
The report said: ”In light of local indicators, and expectations for the US economy and financial market conditions, the Ministry of Finance anticipates that the current economic slowdown will persist through 2012.”
The Island’s GDP officially fell 0.7 percent, or 1.9 percent when adjusted for inflation, to $5.76 billion in 2010 from $5.8 billion in 2009.
A deeper 2010 contraction of four percent to five percent had been expected.
The five-year average from 2006 to 2010 was 0.6 percent, the report noted.
It said the less-than-expected 2010 GDP decline was largely driven by reductions in output in construction, business activities and wholesale and retail sectors.
“These declines were partially offset by strong growth in the hotel and restaurant sector and some stabilisation in the financial intermediation sector,” the report said.
The report concluded a mild recovery in the economy of Bermuda was expected
after this year with anticipated “positive but still historically weak growth in 2013 and 2014”.