Bermuda’s GDP falls in first quarter
A broad measure of Bermuda’s economic activity contracted in the first quarter of this year, primarily from the impact of the Covid-19 pandemic.
Gross domestic product, the value of goods and services generated by the island’s economy, fell year-on-year by 2.8 per cent when adjusted for inflation to $1.75 billion.
A report by the Department of Statistics also showed that GDP before inflation fell 2.1 per cent.
The closure of some retail stores and LF Wade International Airport to scheduled commercial flights during March, and the switch to remote working for most businesses, led to lower consumer spending, lower investment in capital goods and a fall in exports of services due to less visitor expenditure.
Wayne Furbert, Minister for the Cabinet Office, said: “It's clear that Covid-19 is wreaking havoc on the economic and financial plans that countries around the world had prior to the pandemic. In our region, finance ministers have had to become extremely innovative in order to: satisfy new demands for financial assistance; ensure there are funds to execute the normal functions of government; and be poised to stimulate an economic recovery."
He added: “Efforts to reduce the spread of the Covid-19 pandemic in the first quarter included the closure of the LF Wade International Airport, bars, nightclubs, cinemas, gyms, schools, restaurant dine-in services, and non-essential retail. Businesses switched to working remotely and curfew hours were implemented. These efforts helped to contain the spread of the virus but led to declines in consumption, gross capital formation as well as a fall in receipts from the exports of services."
Household consumption fell by 4 per cent, after inflation, to $743.7 million, as consumers spent less on furniture, motor vehicles, catering, personal care and accommodation. However, sales of food and beverages increased during the three-month period.
Government spending fell 5.9 per cent to $192.1 million, reflecting lower payments for employee overheads.
The island’s trade surplus on goods and services increased 1.7 per cent to $590.3 million, mostly due to a 9.9 per cent drop in the import of good and services, such as construction and engineering services and airline services.
Exports of services fell 0.5 per cent, mostly as a result of lower earning from travel services, while exports of goods edged up 0.2 per cent, year-on-year.
Meanwhile, full-year data showed Bermuda’s economy marginally grew 0.5 per cent in 2019, adjusted for inflation, to $6.5 billion. This was up from a 0.4 per cent shrinkage in 2018.
Economy-wide inflation for the year was 3.1 per cent, as measured by the implicit price index.
Before inflation, the economy expanded 3.6 per cent last year, helped by increased activity in construction, including Belco’s North Power Station, the new airport terminal and the St Regis hotel in St George’s. There was also a boost from real estate, health and social work.
International business activity was the top contributor with 25.2 per cent of overall GDP in 2019.