Jason Hayward, the Minister of Economy and Labour, put a positive gloss on gross domestic product figures for 2024 last week, noting that the increase meant the island had seen growth for the fourth consecutive year.

But the more concerning story is that growth in constant prices had more than halved to 1.9 per cent compared to 2023 when it was a healthy 4.3 per cent.

Perhaps the real story is that growth has been slowing since it peaked in 2022, the year the island began to shake off the effects of the Covid-19 pandemic.

In 2019, Bermuda’s gross domestic product was $6.5 billion in constant prices. In 2020, this plunged to $6 billion as Bermuda and the world went into lockdown. It did not regain 2019 levels until 2022 when it grew to $6.7 billion. In 2023, it added a further $33 million to reach $7 billion before edging up to $7.1 billion in 2024.

It is difficult to gauge what has been happening in 2025, but it seems likely that growth will continue to slow, if not plateau.

Leaving aside the eternal question of why it takes 11 months to produce an annual GDP report, the other major takeaway is how international business – driven by international insurers [and reinsurers] — is becoming ever more important to the economy.

It now accounts for more than 29.4 per cent of gross domestic product, up from 27.4 per cent in 2020 and 25 per cent in 2014.

This should not make for pleasant reading for Mr Hayward and David Burt, the Premier. When the Progressive Labour Party returned to power in 2017, one of its major promises was to diversify the economy away from its dependence on one industry. But, if anything, that dependence has grown on the PLP’s watch.

It should go without saying that without the insurance [and reinsurance] industry’s continued success, Bermuda would be in far worse shape than it is now, but two things can be true at the same time. The insurance [and reinsurance] industry is good for Bermuda but Bermuda needs more than one pillar to be successful. A bad year for catastrophes can still have an outsize impact on the insurance [and reinsurance] sector even though it has itself diversified, so Bermuda needs other sectors it can depend on in the event of major insurance losses.

Historically, the island has looked to tourism for that relief, but those days are surely over. Accommodation and food service edged up just 0.3 per cent in 2024 and make up just 3.3 per cent of GDP, down from 4.8 per cent a decade ago.

There is a similar story for the retail and wholesale trades, which now make up just 4.2 per cent of GDP compared to 6.7 per cent in 2014.

That’s important, because as Mr Hayward noted, both are important job providers, with hotels and restaurants making up 11 per cent of total jobs and wholesale and retail creating 12 per cent, although the bulk of those jobs are in retail. Only public administration and international business provide more jobs, with 13 per cent each.

Mr Hayward said last week that the Government will put more focus on retail. He said: “It is an important sector for the Bermudian economy because it employs a vast amount of Bermudians in our economy, so that is something we will focus our efforts on moving forward.”

That may be welcome news for the island’s embattled retailers, but Mr Hayward is years late in coming to this realisation.

To be sure, some of the retail sector’s problems are structural. It is extremely difficult to compete on price with online retailers and overseas brick and mortar competitors like Wal-Mart. Bermuda residents are not shopping less, they are shopping differently. In 2024, they spent $365 million abroad, compared to $1.27 billion at home. That meant 22 per cent of gross turnover was spent overseas compared to 16 per cent in 2019.

The trend is likely to continue as shoppers look for better prices and value. Local retailers then face a dilemma. As the market shrinks, the natural inclination will be to increase the profit margin to remain viable. But rising prices drive customers away. The alternative, lowering prices and profit margins in the hope of increasing sales, is risky.

But that does not mean there is nothing to be done. The Government has already reduced some Customs duties, especially on food. Although the Tax Reform Commission did not propose cutting tariffs in its recent report, the Government still has scope to do this and can also consider further relief on payroll taxes as well.

Retailers need to be more innovative too. Local shops which offer unique Bermuda goods have been successful in the local and tourist markets. Local retailers will always struggle to compete with Amazon and Wal-Mart. But if they can offer goods that cannot be easily replicated, then they stand a chance of success. They can also make shopping a warm and joyful experience, something that is not always true now.

The other sector which has been struggling – hotels and restaurants – has a mixed outlook. The hotel industry should receive an instant boost, assuming that the Fairmont Southampton Princess reopens next year.

It will give Bermuda a large conference centre while the additional beds will help with airlift and generally energise the market.

Chamber of Commerce president Marico Thomas is right to raise the alarm about how the hotel will be staffed, given the difficulty local restaurants already face in finding employees, but the reality is that tourism and international business need the hotel in order to be successful.

There is more potentially good news for the island in that Elbow Beach looks likely to be revamped. That would give Bermuda two returnees in the resort hotel segment.

Nonetheless, the challenges for the Bermuda economy are still formidable and centre on cost. Finding ways to reduce the cost of living and the cost of doing business needs to be at the core of the Government’s thinking in 2026 if it wants to avoid 2024’s slowing growth coming to a standstill.