Economic impact of pandemic laid bare
There is a risk that the impact on Bermuda’s economy from the Covid-19 pandemic may be more severe and longer lasting than currently anticipated.
That warning comes even as the projected fall in the island’s gross domestic product this year has been slightly scaled back.
The Ministry of Finance now believes the island’s GDP will contract between 7 per cent and 9 per cent this financial year. That revision is a small improvement on a 7.5 to 12.5 per cent contraction originally forecast as a result of the impact of the coronavirus.
Before the health crisis, Bermuda had expected to see GDP growth of between 1 and 2 per cent this year.
Finance minister Curtis Dickinson said: “With contraction in many of the key economic data such as visitor arrivals and spending, imports, construction activity, consumer spending and employment income expected to continue, but at a lesser level of contraction than in the first six months of this calendar year, the Ministry of Finance expects GDP in 2020 to be in the range of negative 7 per cent to 9 per cent.”
He also said: “We are still facing much uncertainly, and in particular, there is the risk that the economic impact of the pandemic may be even more severe and longer lasting than currently anticipated.”
Economic indicators show that during the first half of the year imports fell 27.5 per cent, air arrivals were 81 per cent lower, and cruise passenger numbers were down 96 per cent. Air visitor spending plummeted 82 per cent to $32.7 million, while the value of construction work put in place was more than halved to $58 million.
During the first seven months of this year, retail sales fell $45.3 million, or 6.4 per cent. And for the first nine months of the year employment income dropped $194.2 million, or 7.1 per cent.
Bermuda’s balance of payments for the first two quarters improved $100 million year-over-year, to $453 million, due in a large part to a $167 million reduction in the deficit of goods account. The island has seen 502 new international companies and partnerships registered in Bermuda during the first nine months of the year, a 5.7 per cent increase compared to last year.
Mr Dickinson said: “Throughout the economic disruption caused by Covid-19, the Government has and will continue to make a concerted effort to stimulate domestic spending and maintain employment levels in Bermuda through the implementation of timely and targeted measures.”
He urged residents to take the pandemic seriously and continue to follow guidelines to protect public health, and the wellbeing of the island. Mr Dickinson added: “I remain confident that we will come out of this crisis stronger, and the team at the Ministry of Finance will continue to work very hard to strengthen our community.”