Businesses in ‘fragile rebuilding stage’ as economists speak of upsides and downsides of war
Small businesses are in a “fragile rebuilding stage” following two years of restrictions – and war in Ukraine could actually have a positive effect on Bermuda.
Those were just two of the issues explored by Nathan Kowalski, the president of the Chamber of Commerce, Craig Simmons, Senior Economics Lecturer, at Bermuda College, and Barry Brewer, president and CEO of Neptune Group Limited, who were speaking to The Royal Gazette as part of a panel looking at the state of the economy.
They addressed issues ranging from the recent Budget, as well as the war in Ukraine and inflation, and their impact on Bermuda. The full interview can be viewed on the video.
“It's a mixed bag at this point, but I think in general, many of the small and medium size businesses are struggling and we're trying to rebuild,” said Mr Kowalski.
“We have just had two years of restrictions and reduced economic output and we're in this fragile rebuilding stage.
“It's really critical that we get the economy moving and growing and continue the transition we're doing, back to normal, so that all businesses have a chance to prosper, hire and rebuild.”
On the war in Ukraine, Mr Simmons was quite upbeat, saying: “Bermuda's history is replete with wars. I mean, since 1600, I don't know that we've been 10 years without there being a war. I mean, wars have upsides, they have downsides. This is another war.
“You need to put things into perspective and not get bent out of shape and understand it. There are upsides and there are downsides to war. Can we position ourselves to take advantage of the upsides?”
On inflation Mr Brewer said: “Just about everything has to be imported into Bermuda. And the majority of it comes in by sea. There are three carriers that come to Bermuda. They come in about 50 per cent full and they go back empty.
“It costs the same to ship a full container as it does an empty one, and our expenses are high. There are high fixed costs.
“I'll just give you one example of inflationary pressure – bunker prices have gone through the roof. They've doubled since last January.
“Because the cost of goods sold includes the cost of shipping, if there's a spike, as there is now on fuel, and that's above what the inflation rate is, that's going to add more pressure on cost.
“So we're very, very careful. We skipped in 2020, we made a corporate decision not to have a CPI increase for the first time in a very long time to try and help our customers.
“But boy, you can't sustain that. We're seeing that 7.5 per cent was mentioned in terms of inflation in the US and we're seeing that. So, it's not an easy one. And again, we're owned by our importers. They see what the actual costs are, and there's a lot of pressure there.”