Shrinking economy hits all business sectors
Last year's dramatic shrinkage of the Bermuda economy output was as broad as it was deep, impacting all business sectors.Bars and restaurants saw their output fall by $21.5 million, or nine percent, in 2009, as fewer people ventured out during the downturn.
International business, financial services, hospitality, construction and real estate all recorded meaningful falls in output, as real gross domestic product slid 8.1 percent.
Financial services experienced the sharpest decline of 27.5 percent in a torrid year for banks, producing $684.3 million worth of services, compared to $943.8 million the year before. The sector suffered from plunging back deposits and lacklustre returns, the Department of Statistics commentary commented.
Finance Minister and Premier Paula Cox described financial services' decline as “extraordinary, which highlights the vulnerability of Bermuda's small open economy, as external shocks can have quite substantial effects on output as they are magnified around the economy”.
International business contributed 26.1 percent to GDP last year, by far the biggest proportion of any sector with output of $1.49 billion. This reflected a second successive year of decline as output fell $57.4 million, or 3.7 percent, following 2008's $45.5 million drop-off.
The sector was hit by a reduction in jobs, a slowdown in new business incorporations and the soft insurance market.
International business has been the biggest growth driver of the economy over the past decade and its annual contribution was more than $1 billion greater than in 1999.
The decline of Bermuda's tourism industry is reflected in its 4.3 percent contribution to GDP. In 2009, the sector's gross revenue fell to a 14-year low and the contribution to GDP slumped by $64.6 million to $243.5 million.
Real estate and renting was the second biggest sector of the economy, contributing 14.2 percent of GDP. Its output was down 5.4 percent to $810.5 million.
Construction has boomed over the past decade and has been a major generator of jobs. But with many of the major projects that fuelled its expansion over the past five years now complete, it suffered a steeper drop than most last year, falling 14.3 percent to an output of $317 million and shedding 161 jobs.
Another 80 jobs were lost in the retail sector, as consumers tightened the purse strings and output fell 3.2 percent to $421.3 million.
One sector to increase output was public administration, an indication of growing expenditure on Government services. Its output grew 3.3 percent $337.2 million, meaning that it overtook the construction industry as a contributor to the economy.