Bermuda hit harder than most in global recession, says BMA researcher
A researcher at the Bermuda Monetary Authority (BMA) says the global financial crisis has hit Bermuda harder than the rest of the world.
Dr Marcelo Ramella is the deputy director of policy, research and risk at the BMA. He’s a CPA, has an MBA from the University of Milan, a has earned a PhD and fellowship from the London School of Economics and Political Science.
Dr Ramella says that while international regulatory bodies have monitoring the crisis and making changes to the global financial system, we aren’t out of the woods just yet.
“A lot has been going on but on the other hand reform takes time and it’s very early days,” he said during the Hamilton Rotary Club meeting yesterday at the Royal Hamilton Amateur Dinghy Club. “The most difficult part is that the crisis is still unfolding so they’re facing a moving target.
“There’s a big crisis out there. It started, we haven’t seen the end and it is hitting the world economy and individual countries’ economies.”
Dr Ramella says Bermuda is not immune to the global economic crisis and is still suffering the after-effects.
“We’ve seen a three-year drop in GDP and that’s, for all intents and purposes, a recession,” he said.
While Dr Ramella did not use the word ‘depression’ at all during his lecture on the global financial crisis and its affects on Bermuda, he did say Bermuda, in his opinion, has been hit harder than many other countries.
“If we compare the three- or five-year drop in Bermuda with the world GDP, we can see that yes, the world GDP did drop in 2009 but it picked up. But it didn’t pick up in Bermuda — that’s a worrying signal. We can tell that the crisis is hitting Bermuda harder than the rest of the world.
“The likelihood is that Bermuda will be siding closer to Greece or Portugal than to the UK or Germany — probably not a benchmark we want to be proud of,” he said.
Dr Ramella said it’s not surprising to see such high unemployment in Bermuda considering the state of the nation’s GDP and government debt and that if those two things don’t improve, residents on the Island can expect more of the same.
“As GDP falls, employment falls. Filled jobs over the past five years have a drop by the thousands. Hundreds of those are international business jobs.
“In 2011, in a contracted economy, not surprisingly, we were also importing less — we saw that in the retail volume going down. But employee compensation was going down as well — by about $400 million. That’s less hard currency that’s coming to the island to pay for the goods. And that’s worrying.”
While Dr Ramella says Bermuda needs to bring in more hard currency to boost GDP and pay off debt, he offered only a very vague strategy on how to attract that currency.
“Concentration on one sector of the economy makes you vulnerable,” he said. “It’s going to take a little effort to convince that diversification here is a good thing.”