Economy shrank 5.9 per cent in third quarter
A broad measure of Bermuda’s economic activity contracted in the third quarter of 2020, primarily because of restricted economic activity due to the Covid-19 pandemic.
Gross domestic product, the value of goods and services generated by the island’s economy, fell year-over-year by 5.9 per cent when adjusted for inflation, to $1.437 billion. This followed a 15.7 per cent drop in the second quarter.
The decline was influenced primarily by falls in final consumption and gross capital formation owing to restrictions imposed on some economic activity as mitigation efforts to reduce the spread of Covid-19.
In contrast, there was a 4.5 per cent net surplus in the external balance of goods and services, with less money spent on imported goods and services.
In current prices, GDP decreased by 7.4 per cent.
In constant prices, adjusted for inflation, final consumption fell by 7.5 per cent as household consumption dropped 9.9 per cent, to $734.1 million, while government spending on goods and services increased 2 per cent year-over-year.
For durable goods, spending increased 12.9 per cent with more purchases of motor vehicles and furniture. Consumption of non-durable goods inched up 0.7 per cent, mostly due to spending on food and beverages.
Spending on services contracted 10.9 per cent with the declines recorded for travel-dependent services such as accommodation and air transport, and also catering services and personal care services, domestic services and legal services.
Government final consumption increased to $208.6 million, inflation adjusted, which reflected higher spending on goods and services, while payments for employee overheads and other personnel costs decreased.
Gross capital formation, or investment in fixed assets, fell 11.2 per cent to $205.2 million. Gross capital formation related to construction fell 17.2 per cent, while investment in machinery and equipment dropped 2.8 per cent, which was said to reflect reduced construction activity during the final phases of major construction projects.
The net surplus on trade in goods and services increased 4.5 per cent to $289.2 million.
Payments for the imports of goods fell 12 per cent because of decreases in imported fuel, food and finished equipment.
Imports of services decreased 33 per cent as passenger and freight transport, travel services and construction services’ payments fell.
Exports of services were 10.9 per cent lower, mostly due to travel restrictions, and the exports of goods dropped 33 per cent, due primarily to less fuel sold to visiting airlines.
Commenting on the Quarter 3, 2020 Quarterly Gross Domestic Product by Expenditure publication, Wayne Furbert, Minister of the Cabinet Office, said: “We recognise that the challenges of the pandemic have severely tested us as a country. But I believe that we have a resilient economy. We are seeing some encouraging activity with residents supporting our key industries and spending locally.
“I also believe that we are an innovative Government, and our economic stimulus plans; the implementation of policies to support and strengthen our local business; and our engagement to attract those to come to Bermuda to work are bearing fruit and we expect that will continue in the months to come.”
Click on Related Media for a PDF of the GDP publication.