in the growth of the US economy this year.

The Economic Review compiled by the Ministry of Finance saw Government acknowledge that real gains in the tourism picture are not likely to happen soon.

But Government's success in demonstrating the excellent legal and regulatory framework underpinning the finance sector places that sector in a strong position.

The review states, "There is strong evidence that Bermuda is becoming the international centre of choice for an increasing number of distinguished firms that want to be associated with a reputable jurisdiction.'' Government feels the sector will also benefit strongly in 2001 from the successful development of the Island as an e-commerce centre.

"Bermuda's large insurance sector is well positioned to benefit from the hardening market for insurance premiums. Major reinsurers will reap benefits from efforts made to consolidate prior acquisitions and to control operating costs. Despite the probable slowdown of the US economy, Bermuda's insurance market is expected to expand due to its competitiveness and innovative nature.'' The review states that government's large capital expenditure programme will benefit the construction industry over the next several years.

"The sizable increase in employment income should support a higher level of spending by Bermuda's residents. There are other factors that will have an effect on consumer expenditures. The decrease in the number of filled jobs recorded in the 2000 employment survey may lower the level of consumer confidence.'' "The Ministry of Finance expects real growth in GDP for fiscal 2000/01 to be around 2.9 percent. In fiscal 2001/02 real economic growth of 2.7 percent is forecast. Slower economic growth in the US will have a dampening effect on the tourism and international business sectors.

"Real growth of 1.6 percent is expected in the tourism sector as a consequence of the major refurbishment efforts being made by several hotels.

Growth of the international sector will likely slow a little, but is still expected to expand by over six percent in real terms,'' the review said.

Government expects domestic demand to pick up over the coming year, but said that healthy growth rates in both domestic and external demand will be offset somewhat by higher imports.

"Bermuda's rate of inflation should remain fairly stable or decline moderately over the fiscal year 2001/02. An economic slowdown in the US could result in lower inflation in that country which would affect Bermuda's inflation rate because that country is a source of many of the products that Bermuda imports.''