Bermuda?s GDP growth slowed to 1.6 percent in 2004, falling short of 3 percent projections, a Government bulletin on Friday revealed.

And figures showed the economy continues to count more and more on international business, as tourism activity, once the Island?s economic pillar, continued to decline.

In total, the Island?s Gross Domestic Product expanded by 5.1 percent to $4.5 billion, or 1.6 percent in real growth after inflation adjustment, data compiled by the Statistics Department showed.

In comparison, the Island?s GDP growth, before inflation, topped eight percent in 2002 and 2003.

GDP, a measure of the country?s total production of goods and services, was predicted in earlier Government estimates to be headed for three percent growth in 2004.

External agencies generally watch for Bermuda?s GDP growth to fall in line with US economic activity.

In 2004, the US, Bermuda?s largest trading partner for both goods and services, significantly outpaced the Island with real economic growth of 4.2 percent, the bulletin said.International business ? the biggest contributor to Bermuda?s GDP since 2001 ? saw 6.7 percent growth, approaching the $1 billion mark, Government?s report said.And construction activity expanded ten percent, real estate output was 3.1 percent higher and the tourism sector rebounded from a slump following Hurricane Fabian in 2003, as hotels and restaurant output expanded seven percent.

The 2004 market value of restaurant and hotel services measured $199.5 million, or about 5.5 percent of 2004?s $3.5 billion in GDP, when measured at constant market prices.

In contrast, international business production accounted for more than 20 percent of current market price GDP, hitting $723.9 million in 2004.

?Most of our eggs are in one basket, and what I read into that in a broader sense is a widening gap between the haves and have-nots,? said Grant Gibbons, who was replaced over the weekend as Opposition Leader by Wayne Furbert.

From 1998 to 2004, Bermuda?s hotel and restaurant production declined from around eight percent of GDP to 5.5 percent.

Over the same period. international business activity accelerated from 14 percent of GDP to in excess of 20 percent.

Dr. Gibbons, a former Finance Minister, said he would expect the trend to continue in 2005.

And he pointed out the negative impact this could have on Bermuda jobs with international business typically employing more expatriate workers than other sectors.Government?s 2005 economic review showed that expatriates now hold 28 percent of the Island?s jobs.

While Dr. Gibbons said international business saw a surge in activity in the last quarter ? the Island attracted a wave of ten new insurance companies backed by some $10 billion in new capital ? he questioned if that would be enough for 2005 GDP growth to significantly outpace 2004?s, especially with a continued slump in tourist spending.

?Clearly if Government so badly estimated growth in 2004 they might want to rethink 2005?s numbers,? he told ?There clearly has not been any real improvement in tourism (in 2005), and new starts in the construction sector were lower, but November and December incorporation activity may bail it out.?

Government could not last night be reached for comment on 2004?s GDP growth falling short of estimates, or whether 2005?s GDP estimates may be revised.

Premier Alex Scott, during a Press conference last Thursday, reaffirmed earlier predictions that GDP growth will reach 2.5 percent to three percent in 2005. An updated estimate of GDP growth is expected in February, when Government makes its annual budget statement.