The failure of the United States Congress to pass an economic stimulus package will "clearly" have an impact on the Bermuda economy, according to the Government's chief economic advisor.

But Government's economic advisor Dr. Andrew Brimmer, who has flown into Bermuda this week for meetings with the Minister of Finance Eugene Cox and Ministry of Finance officials, said he could not say what that impact would be.

In December, Dr. Brimmer predicted that gross domestic product would fall by 1.5 percent in 2002. He made this prediction on the assumption that Congress would pass a package which would help stimulate the economy before recess. Congress broke for the holidays before any decision was made on the matter.

"Clearly there will be an impact, but I cannot say what that will be," Dr. Brimmer said yesterday when asked about its failure to make a decision.

He said the debate was fully expected to resume promptly when Congress resumes. He added: "But there is still a great deal of speculation about what they will do."

He said until that was known, it was difficult to predict what would happen to the Bermuda economy as a result.

He said: "You might recall that the base premise of my position was if Congress passes the stimulus package before the end of the year, then recession would not be very deep and would not last very long, but if they did not, or if it would be delayed into the new year, then the recession would last longer and be deeper.

"Congress did not pass the stimulus package and there is speculation on what they will do when they get back. The impact will depend on the timing and the size of the package. Until then it is hard to know."

In December, Dr. Brimmer revealed the results of an economic survey carried out by himself and the Ministry of Finance on the implications of the US economy on Bermuda, saying GDP was to contract by 0.4 percent in 2001 and fall even further to minus 1.5 percent in 2002.

Original estimates were for the economy to grow by 2.7 percent during the 2001-2002 period, but he said it now appears the combined effect will be a two percent loss and Dr. Brimmer warned the figures could be lower.

On tourism, Dr. Brimmer said for 2001 the occupancy rates at hotels are believed to have fallen 20 percent and may fall a further 15 percent in 2002.

He said at the time: "The major factor underlying the downward revision was the sharper than projected reduction in the volume of visitor expenditure for the year.

"Looking ahead to 2002, the overall Bermudian economy is expected to exhibit continuing weakness. As a by-product, unemployment will rise further."

Dr. Brimmer said Government would get $24 million or four percent less in revenue in 2002, but spending would increase as more social assistance would be required by Bermudians.

"A moratorium on non-essential overtime and non-critical furniture and equipment acquisitions. Government travel has also been cut back and a funding freeze has been placed on long-standing vacant posts," he told the business community.

He said large capital projects, such as the Berkeley Institute would not be stopped and several unnamed capital projects might be started to take advantage of more labour during a recession.

A result of a poor economy, the poor will get poorer and there will be fewer jobs in Bermuda, said Dr. Brimmer and he predicted that if the recession in the US continued into the early months of next year the Island's economy would suffer, particularly in the tourism sector.

"One should expect the effects of the US recession to spill all over the Island. The principal reason is the sharp reduction of travel from the US mainland and the related decrease in foreign visitors' spending. These negative effects are already evident and they are more likely to worsen than to diminish in the months ahead," said Dr. Brimmer.