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Economy grows for first time since 2008

Top sectors: the biggest sources of economic activity in 2015 (Graphic by Byron Muhammad)

Bermuda’s economy grew in real terms last year for the first time in seven years, according to government statistics released yesterday.

Gross domestic product — the value of all the goods and services the island produces — was $5.9 billion last year, up 4 per cent compared to 2014.

After being adjusted for inflation, the increase was 0.6 per cent, the first time real GDP has risen since the 1.1 per cent increase in 2008.

The rise in economic growth translated into a 4.1 per cent gain in GDP per capita which was measured at $96,018 per person in 2015.

The growth was broad based, with 13 of the total 15 industries recording growth in value added, led by international business and retail, which produced the largest increases by dollar value.

The figures also provided evidence that the massive makeover of the Hamilton Princess Hotel and America’s Cup-related projects boosted the economy, as the construction sector’s contribution to GDP grew by 6.7 per cent.

International business activity represented 28 per cent of the island’s GDP and the sector’s value added rose 5.3 per cent from 2014 to $1.66 billion, driven by increases in wages, salaries and benefits, and investment compensation.

Ross Webber, chief executive officer of the Bermuda Business Development Agency, said: “This is a very encouraging milestone. The fact that this is real GDP growth, led by international business, is reassuring and underscores the BDA’s mission — to raise GDP and create jobs.

“Through the BDA Concierge Service, we are certainly seeing more companies establishing in the jurisdiction across industry sectors, and we will continue our efforts to keep the trend on track.”

After international business, the next biggest sector was real estate and renting activity, which climbed 2.1 per cent to $983.55 million.

The wholesale, retail trade and repair services segment saw strong growth, with value added increasing 10.9 per cent.

Within this industry, growth in value added was led primarily by sales and repairs of motor cycles, up 43 per cent, sales of motor vehicles, up 32.3 per cent, and sales by food stores, up 12.9 per cent.

Grocery stores’ sales increases were probably helped by the reduction of the 10 per cent Wednesday discount to 5 per cent, as of March last year.

Value added by businesses selling household appliances and equipment rose 27.2 per cent, while businesses trading in hardware, paints, glass and other construction materials increased 11.9 per cent.

Value added for hotels and restaurants was 3 per cent higher in 2015. Restaurants saw a $7.3 million, or 7.1 per cent, improvement over the previous year, despite a 2 per cent decline in visitor arrivals last year.

Public administration’s contribution to GDP fell 1.2 per cent, as the Bermuda Government’s reductions in wages, salaries and employee overheads continued.

The statistics also highlight the sectors that pay out the most in employee compensation.

International business leads the way, having paid out $1.44 billion to its staff, while financial intermediation, including the banking industry, is in a distant second with $356.4 million and business activities in third with $347.4 million.

Public administration forked out $327.4 million in compensation. The figures also show the value of the wholesale and retail ($272 million), hospitality ($232.9 million) and construction ($124.5 million) sectors as major employers.

The summary from the Department of Statistics also provided information on “gross national disposable income”, defined as “the income that can be used by households for consumption or savings as well as the income not distributed to owners of equity for non-financial and financial corporations”, which increased 3.4 per cent year over year to $6 billion.

Gross national savings were measured at $1.9 billion, representing a 6 per cent increase year over year. Of the total savings, $704.2 million was spent on investment in capital goods.