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Island’s economy returns to growth

Import increase: the island bought more goods and services from overseas in the second quarter

Bermuda’s economy grew in the second quarter of the year, driven by an increase in services exports and higher capital spending.

Gross domestic product — a measure of all the goods and services produced by the island — totalled $1,442.7 million, up 2.7 per cent on the same period last year, according to a report published by the Department of Statistics.

Real GDP growth — that is, after inflation was taken into account — was 1.3 per cent.

It was the sixth quarter of real GDP growth in the past seven and represented a bounce back to expansion after the 0.3 per cent decline in the first three months of this year.

The main driver of growth was a $39.7 million increase in the exports of services, mostly generated by increased earnings for travel and insurance services.

The exports increase helped to boost the island’s net trade surplus by 8 per cent to $24.2 million.

Imports of goods and services, which has a downward effect on GDP growth, increased $14.2 million reflecting higher payments for telecommunications, professional and management consultancy services.

It was the third successive quarter of imports growth, reflecting a higher demand in the economy for goods and services purchased from overseas.

Gross capital formation — or net spending on capital assets, expected to last for more than one year — grew $19 million, or 10.8 per cent in real terms, driven by higher spending on transportation equipment such as boats and vehicles.

The figures suggested that the Bermuda Government tightened the purse strings during the third quarter, as government consumption fell 2.3 per cent during the quarter, or 3.1 per cent after inflation.

Island residents also reduced their spending, as household consumption fell 1.4 per cent after inflation to $773.4 million.