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Island’s GDP falls 4% in fourth quarter

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Social distancing restrictions as a result of Covid-19 reduced household consumption in the fourth quarter of 2020, shrinking the economy by four per cent. (Photograph by Akil Simmons)
the economic impact of Covid-19 is reflected in decreases in Bermuda’s gross domestic product figure, which includes falls in household final consumption, and exports of services (Data from Department of Statistics/Graph by Bill Zuill)

A broad measure of Bermuda’s economic activity contracted in the fourth quarter of 2020, primarily because of restricted economic activity due to the Covid-19 pandemic.

Gross domestic product is the value of goods and services generated by the island’s economy. In the fourth quarter it fell year-over-year by 4 per cent when adjusted for inflation, to $1.51 billion. This followed revised falls of 16.1 per cent and 5.2 per cent in the second and third quarters, respectively.

The decline was influenced primarily by lower household final consumption on transport, recreation, restaurants and accommodation, which fell 5.8 per cent year-on-year, to $759.8 million.

Limited construction activity was reflected in a 7.7 per cent decrease in gross capital formation relating to construction.

Less spending by visitors on the island, and fewer flights resulting in reduced sales of fuel to visiting airlines, were among factors that also affected GDP.

Wayne Furbert, Minister for the Cabinet Officer said: “Consumption of services fell by 6.3 per cent mostly due to lower expenditure for recreation services, restaurants and accommodation services. For durable goods, spending decreased 4.6 per cent with fewer purchases of motorcycles and computers.”

Spending on non-durable goods grew by 12.7 per cent, due largely to a 12.4 per cent increase in expenditure on food and a 5.3 per cent increase on alcoholic beverages.

The Government had higher spending on employee overheads during the quarter, together with other personnel costs and spending on goods and services. Consequently, Government final consumption rose 4.8 per cent.

Imports of goods and services decreased 10.4 per cent as payments fell for passenger and freight transport, travel services, construction services, imported fuel, finished equipment and transport equipment.

Click on Related Media for fourth quarter GDP publication PDF.

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Published May 31, 2021 at 3:58 pm (Updated June 02, 2021 at 8:10 am)

Island’s GDP falls 4% in fourth quarter

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