Brown: construction can keep fuelling growth
The main driver of Bermuda's increase in gross domestic product is expected to continue to deliver positive economic news, a Bermuda Government minister said yesterday.
GDP for the third quarter of 2018 increased 1.6 per cent year-over-year, Government announced. At constant prices, which adjust for inflation, third-quarter GDP was estimated at $1.1 billion. The main driver was a $59.9 million gain in gross capital formation, or investment in fixed assets.
Investment in machinery and equipment increased 37.1 per cent due mostly to telecommunication equipment, projectors and structures (and parts thereof), the report said.
Capital formation related to construction registered a 36.2 per cent increase during the period reflecting major construction projects such as hotel development and the airport project.
Walton Brown, Minister for the Cabinet Office, said: “We see signs of ongoing construction development. That is a good sign and we expect it to continue.”
He said there were more projects in play than the frequently cited airport development and St Regis hotel project in St George's. Progress at Morgan's Point is “ongoing, there is slow but steady development”, Mr Brown said.
“The Morgan's Point development is a major development,” he said. “There are also a lot of home construction projects that are going on.”
The increase in GDP during the third quarter of 2018 marks the second consecutive quarterly GDP increase after a 0.7 per cent increase in last year's second quarter. That result followed a GDP drop of 1.3 per cent in the first three months of last year.
At current prices, which are not adjusted for inflation, nominal GDP increased 2.4 per cent in the third quarter.
Overall inflation for the third quarter, as measured by the implicit price index, was 0.8 per cent.
Other highlights of the economic report:
• After adjusting for inflation, household final consumption decreased 0.3 per cent to $628.4 million. Households spent less year-over-year on clothing, electricity, motor vehicles and fuel.
• Government final consumption decreased 3.7 per cent due to lower spending on goods and services.
• The net surplus on trade in goods and services decreased $33.7 million or 34.7 per cent, due primarily to a rise in the imports of goods. Imports of goods, which have a downward effect on GDP growth, grew 17.8 per cent due mostly to imports of fuel and machinery. Payments for the imports of services rose 9.7 per cent due to construction/engineering services. Exports of services rose 4.1 per cent during the period due mostly to increased earnings from the export of financial services.
Mr Brown said: “This government has made a determined effort to stimulate our economy by attracting foreign investment through targeted investment strategies and diversification of business development initiatives. We believe our strategy will translate into higher employment numbers, providing moderate economic growth in most sectors.
“Considering all of the above factors, we are of the view that Bermuda's economic outlook is continuing to improve.
“Since becoming the Government in July 2017, we have focused our efforts on growing the Bermuda economy by implementing policies designed to create employment opportunities for Bermudians and promote entrepreneurship.
“We have embraced emerging technologies such as fintech and insurtech which have seen 66 new companies formed in Bermuda, with Bermudians being hired by these start-up companies.”
Asked how many fintech jobs had been created, Mr Brown said: “I don't know the precise number, but I know they are establishing offices and hiring people.”