Economists have pointed to alarming trends for Bermuda’s economy, including a softening in tourism and a growing disparity between the “haves and the have-nots”.

Bermuda is increasingly divided into two economic realities, it was observed, and the gap between the “two Bermudas” is widening.

Craig Simmons, was one of two esteemed economists asked to consider new perspectives on the recent release of annual figures which showed Bermuda’s gross domestic product, rose 1 per cent, on an inflation-adjusted basis, to $7.2 billion in 2025.

David Annan, the Bermuda College economics lecturer, was also asked about the lacklustre tourism numbers, as exhibited in the specific hospitality and accommodation sector in 2025.

A tourism report in February said the tourism industry was responsible for less than 5 per cent of the island’s economy in 2024.

During last week’s press conference, Jason Hayward, the Minister of the Economy and Labour, highlighted how 2025 was the fifth consecutive year of growth.

But that growth has narrowed remarkably, and he acknowledged there were “areas of the economy where performance has been weaker”.

Dr Annan said: “Nominal GDP rose 6.5 per cent, but 5.4 points of that was price increases. When the minister says growth beat the Ministry of Finance’s estimate, that is mostly an inflation effect, not more output.”

The growth in real GDP has been on a precipitous three-year decline, but with regard to the small increase in 2025, Dr Annan pointed out: “Of the $74.8 million real increase, three industries supplied 78 per cent: financial and insurance, international business and construction.

“Eight of 19 industries shrank. Part of the remaining growth came from public administration (government sector), mostly from higher personnel costs.”

Mr Simmons, Professor Emeritus, who lectured at the Bermuda College for 35 years before retiring in 2024, commented: “Bermuda is increasingly divided into two economic realities.

“The gap between working-class/blue-collar incomes and white-collar incomes continues to widen, as documented in the Employment Briefs 2020—2026. From 2013 to 2025, working-class/blue-collar incomes declined by double digits, while white-collar incomes increased by double digits.”

The prominent Bermudian economist pointed to a Bermuda savings rate of 50 per cent, meaning that residents save an average of half their after-tax income.

But the figure, he said, masks a sharp disparity as evidenced by the Household Expenditure Survey data, which indicates that low-income households save nothing, giving them a savings rate of 0 per cent.

Further, he pointed to the shifts in economic activity: “After adjusting for inflation, consumer spending, one of the largest components of GDP, has declined since 2023.”

And with regard to export sectors, Mr Simmons said: “International business is accounting for a growing share of overall economic activity, while tourism’s share is shrinking.”

Relatedly, Dr Annan noted that hospitality was the largest decliner in the economy for 2025.

He said: “Accommodation and food service fell 5.6 per cent, or $15.9 million — more than any other industry. The [statistics] department attributes $10.4 million of that to food and beverage service, so this is mainly a restaurant story rather than a hotel story.”

Air arrivals, he noted, were up 1.7 per cent to the end of July, but there were storm-related cancellations from August to early November and reduced US airlift.

He referred to the 12.2 per cent fourth-quarter drop in leisure air arrivals, and 12.7 per cent drop in cruise passengers for the year, partly because of King's Wharf works and weather cancellations.

Dr Annan said: “Cruise passengers spend heavily in restaurants and shops. Is it cause for concern? Yes, moderately.

“Total visitor spending rose 3.5 per cent, and residents spent 6.3 per cent more at restaurants and hotels, yet the industry’s value added still fell.

“That suggests operators’ costs, for food, energy and labour, are rising faster than their prices.

“Wages make up about 69 per cent of the sector’s value added, so this is where Bermudian workers feel it first.

“Regional peers also did better. The Cayman Islands and The Bahamas each grew around 2.8 per cent, and The Bahamas increased cruise arrivals by nearly 14 per cent, while ours fell.”

• To read the 2025 GDP report, see Related Media

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Bermuda GDP report 2025