Island's economy shrinks for second consecutive year
Bermuda's gross domestic product - which measures the total value of goods and services produced on the Island - fell for the second consecutive year, according to figures released this afternoon.
It means total GDP was $5,764,584,000 or $5.8 billion, down 0.7 percent in 2010. When inflation is taken into account, the fall in GDP was 1.9 percent.
A report released by Government says: “This decline in economic activity marked the second consecutive year of negative growth in the Bermuda economy, following a rebased five percent fall
“Job losses and business closures negatively affected production in industries such as construction, manufacturing, international business, transport and general business services. The fall in value added for these industries hindered the rebound in growth for businesses in the financial sector, hotels, restaurants, and those establishments offering education, health and social work services. Overall, the decline in economic growth translated into a one per cent fall in GDP per capita which was measured at $89,282 per person in 2010.”
The report adds: “In 2010, the value added by the International Business sector declined for the third consecutive year, recording a 1.2 percent decrease in economic activity. Gross value added fell by $17 million in 2010 on the heels of a $68 million drop the year before.
“Among the contributing factors to the decline in output for international businesses were job cuts, claims related to natural disasters and the re-domicile of some businesses to other parts of the world.”
Tonight the PLP issued this statement: "The 2010 GDP figures comes as no surprise as a contraction in economic activity was expected. However the annual GDP figures or a 0.7 per cent (nominal) and a 1.9per cent (real) decline was less than our forecasted contraction. We expected the large downturn in the working population to have a greater negative impact on the economy.
"While the overall economy contracted in 2010 there was significant levels of growth in several sectors of the economy. The financial sector which includes our local banks and local insurance companies had growth of 2.2 percent. The hotel and restaurant sector grew by 6.5 percent; this was fueled by greater spending by visitors to the island. In addition the education, health and social work sector along with the community, social and personal services sector grew 8.5percent and 8.6 percent respectively. The growth in these industries caused total Gross Value Added to increase 0.1 per cent year over year however when you factor in the net of imputed bank charges and taxes the overall GDP declined 0.7 per cent.
"The construction industry experienced the largest year over year decline in 2010, falling 17.9 per cent. This was the main contribution to the overall contraction in the economy, however with the new hospital redevelopment already underway, we are confident that this will assist with the recovery of that sector of our economy."