`There is now a real potential for a downturn in our economy' Genn Titterton A leading light in the Bermuda business world has issued a warning about a potential downturn in the economy.

While stating that the economy was presently in a strong position, President and Chief Executive Officer of BF&M, Glenn Titterton, sounded the alarm about the Island's prospects in his company's annual report.

"There is now a real potential for a downturn in our economy although if well managed, there is every reason to expect the effects to be both modest and temporary,'' he said.

The view echoes those published in the year-end report of Masters, one of the Island's home goods stores, which were released last week.

In a written statement, Masters, whose president is Susan Wilson, said: "There is every indication that retail sales are softening and that consumer spending reflects uncertainty over the economic outlook for Bermuda.'' While incorporations of companies are up on last year, growth in the international business sector has slowed.

Added to this is the downturn in tourism and a hike in inflation which last month reached a high of 2.9 percent.

The Bermuda Stock Exchange index on Monday also fell to below the 1400 mark for the first time since July 1999.

President of the Bermuda Chamber of Commerce, Cris Valdes Dapena, confirmed that there were fears about the economic future in the business sector in different fields all over the Island.

But she added that she believed that Bermuda would be able to deal with the challenges facing the economy.

She said: "It is a combination of factors, one of which is the change in immigration policies and CURE. This coupled with the volatility in the world financial markets, being at the lower end of the reinsurance cycle, and dropping tourist figures combine to give out this feeling.'' But she said that she believed that the Island would bounce back and there was a will to solve the problems facing the economy.

Mrs. Valdes Dapena said that at the moment the international business sector was currently in intensive meetings with the Government to resolve their differences.

And she added that bullish and bearish markets would even out and that the Government and the private sector were working as never before to ensure an upturn in the tourism industry.

"Failure is a possibility, but not an option,'' said Mrs. Valdes Dapena about the tourism industry.

Shadow Finance Minister, Grant Gibbons, said that the general feeling about the economy was based both on fact and perception of what was to happen in the future.

"There is no doubt that 1999 was the worst for tourism. The number of passengers arriving by air was the lowest in five years.'' He added that international business spending stood at $750 million for 1998 to 1999, and that growth in this sector had slowed from 16 percent to about 1 percent.

"These are the two principal sources for injection of foreign capital and there have been real changes in the last year to both of them.'' He added: "While we are not going down, we are certainly slowing compared with previous years.'' Mr. Gibbons pointed the finger at the Government for raising land taxes and reducing the amount of money available to spend for both businesses and individuals. He added that the implementation of the national pension scheme meant that there was less money to spend by both companies and their employees.

"Psychologically, the markets' recent volatility would have impacted both visitors and people here who have invested in the stock market. They will be pulling back on their spending.'' But he added: "It is premature to say there is a downturn, but I would not be surprised if the economy is slowing.'' Glenn Tittetton Chris Valdes Dapena Grant Gibbons ECONOMY ECO