International company spending and the mini-boom in construction have kept the Bermuda economy humming along.

Construction spending is estimated to have grown 70 percent in the Government's 1996/97 fiscal year to March 31, fuelling a surge in the provisional estimates of Bermuda's gross domestic product (GDP), or measure of economic activity.

Provisionally estimated at $2.19 billion, GDP recorded a year over year increase in current market prices of 5.3 percent.

Both the external and domestic sectors of the economy contributed to the higher level of output, increasing by 6.2 percent and 7.4 percent, respectively.

But fixed capital outlays were determined to have significantly increased and the level of real output in the economy grew three percent during the year.

Domestic demand was spurred by a strong 22.4 percent increase in gross fixed capital formation, representing the building boom.

General Government expenditures on current goods and services rose 7.6 percent year over year to $267.8 million. Payroll costs increased in line with inflation, while other operating costs rose more sharply. Consumer spending rose a modest 2.9 percent.

In real terms, government and household expenditures rose 4.9 percent and two percent, respectively.

In the external sector, visitor expenditure remained relatively stagnant, with total spending of $476.1 million (1995/96: $476.5 million).

International company expenditure rose 12.9 percent to an estimated $630.2 million, accounting for about 48 percent of total foreign exchange. Demand for local goods and services from non-residents increased with exports rising 9.9 percent to $193.7 million.

Foreign exchange payments were $1.1 billion, as imports of goods and services rose 9.5 percent, resulting in a current account trade balance of $197.4 million for the year.

Income generated by total production in Bermuda (GDP at factor cost) was provisionally placed at nearly $1.9 billion, up 5.8 percent. Employment income rose 7.3 percent to nearly $1.3 billion and accounted for 69 percent of all income, compared to 68 percent the year before. Rental income was estimated at $283.3 million, up 2.1 percent year over year.

GDP measures the size of an economy in terms of its production, and represents an aggregate valuation of all goods and services produced within a country using is domestic resources over a specified period of time.