Recovery expected to gather pace this year
Bermuda’s economic recovery will accelerate this year, according to the latest projections by the Ministry of Finance.
Gross domestic product, a measure of economic activity, will expand by between 2 and 3 per cent, the ministry estimates in The National Economic Report of Bermuda 2015.
Final GDP figures have not been calculated for 2015, but the ministry estimated the economy grew between 1.5 per cent and 2.5 per cent last year. All growth estimates are adjusted for inflation.
The ministry pins its hopes for growth on increasing confidence among consumers and investors amid promising developments in international business and tourism, as well as new jobs generated by major hotel projects and the airport redevelopment. And it sees the positive trend for the economy continuing beyond 2016.
The report concludes: “Consistent with the above-mentioned broad trends and increased consumer and investor confidence, the Bermuda economy is predicted to have stable to strong growth in the next few years.
“The key assumption is that the local sectors with strong connections to global economies (tourism and international business) will improve their value propositions, thus increasing external demand for their services.
“Growth in domestic demand is assumed to be sustained by continued stimulation in local employment, particularly in the construction sector.”
The report recognises the consolidation in the insurance industry that has cost jobs, as the sector also faces challenges from low investment returns and a soft reinsurance market.
However, it adds that the European Commission’s recommendation of Solvency II equivalence should benefit the island in the long term and enhance its financial stability.
The Bermuda Business Development Agency is working to boost growth in several areas including asset management, trust and private client business, risk solutions and international commerce, the report adds. And it is exploring new markets including China and South East Asia.
The finance ministry analysts see positive prospects for tourism with an improving world economy and low oil prices driving the demand for travel. It expects air and cruise arrivals to increase this year.
“In the first quarter of this year, airline seat capacity will increase 8 per cent, the report states.
“This will help give vacationers easier access to the island by air, and perhaps more importantly, provide a greater opportunity to lure business and leisure groups — a performance area that lagged in 2015 as a result of poor group sales booked before the start-up of the Bermuda Tourism Authority.”
The BTA reorganised its sales team last year, helping to get group bookings for 2016 and 2017, the report states.
“More cruise ships will call on Bermuda in 2016, bringing a projected 10 per cent increase in visitors and more occasional calls for our ports in Hamilton and St George,” the report adds.
Numerous opportunities are seen for new construction jobs, including the third phase of the Hamilton Princess’ $100 million restoration, which is expected to create 100 jobs. Ongoing work includes a $50 million redevelopment at Pink Beach and the first phase of a $14 million redevelopment at Coral Beach.
Planned work at Morgan’s Point, Ariel Sands, the new hotel in St George’s and the airport redevelopment, which should break ground late this year or early in 2017, will add hundreds more construction jobs, the report states.