Economic growth is again slowing in Bermuda, figures released in December show.

While the Government used the latest available statistics to highlight there was growth in the past four years, there was no substantive explanation as to why that growth has diminished over the past three.

Gross domestic product at constant purchasers’ prices was up 6.3 per cent for 2022, up 4.3 per cent for 2023, but provisionally up just 1.9 per cent in 2024. These are the most recent estimates of GDP using 2013 benchmarks.

There has been dramatic growth in the insurance and reinsurance sectors of international business, the main driver of the economy. The industry has grown to rival the Government as the island’s largest employer.

Tourism continues to catch its breath from the pandemic and major hotel closures.

Emerging from the plague of 2020, the rest of the decade was expected to be the “Roaring Twenties”, but there are already mixed economic signals, in part caused by the Fairmont Southampton and Elbow Beach closures.

David Burt, the Premier and Minister of Finance, reported in early December a strong labour market, job growth, projected higher government revenue and an increase in corporate income tax revenue that had been anticipated.

His government is reporting no unemployment (1.4 per cent) and Jason Hayward, the Minister of Economy and Labour, forecasts continued growth for 2026.

Inflation appears to be a key concern in the year ahead, but the island faces a continually shrinking retail sector, which puts many jobs on the line. The hospitality sector is moving into the annual slowdown, although there has been word already from restaurants that 2025 was concerning.

The year behind us saw no abatement of food insecurity for a rising number, as a lack of affordable housing remains in the news.

The bright spot is the expected hotel beds coming with the Fairmont Southampton fully online within the next year. Elbow Beach Hotel may also return, although with a limited number of keys.

With the Government reporting several months in arrears — the unemployment number is more than a year old — any rise or fall in our economic fortunes is usually experienced long before it is reported.

Digital assets

Bermuda enters 2026 with a digital assets regime that is far more mature than when the island first set out to regulate the sector in 2018.

But the coming year brings challenges: a significant global shift towards regulated stablecoins and tokenised finance, new compliance requirements at home and the high-stakes regional anti-money-laundering evaluation — the evaluation last held shortly after David Burt first took office as premier and finance minister.

He has continued to frame Bermuda as an early mover in the sector, recently telling The Royal Gazette: “Digital asset frameworks globally have basically copied from what it is that we’ve done here.”

But global competition is no longer theoretical. The United States has enacted the Genius Act, officially known as the Guiding and Establishing National Innovation for US Stablecoins Act, which sets out its first comprehensive stablecoin framework. Britain, the European Union and Singapore have advanced their own regimes, and several are due to come fully into force during 2026. What was once an unregulated space is now falling into place across leading financial centres.

At the same time, Bermuda is preparing for its own structural changes. The Beneficial Ownership Act 2025 has overhauled the island’s ownership-transparency framework, expanding reporting obligations to nearly all entities. Enforcement begins in mid-2026. At the same time, amendments to the Proceeds of Crime Act are expected to strengthen suspicious-activity reporting rules, widen the scope of regulated trustees and advisers, and formalise risk assessments on areas such as proliferation financing.

These changes are arriving just months before Bermuda undergoes its next mutual evaluation by the Caribbean Financial Action Task Force. That assessment, beginning in October 2026, will judge whether the island has strong rules on paper and whether they are enforced effectively.

The Premier has repeatedly emphasised the strength of Bermuda’s regulatory philosophy. Speaking at the PwC Insurance Summit 2025, he said: “I haven’t used that word [crypto] since 2017.”

He went on to explain the Government’s preferred terminology: “We’ve used the words ‘digital assets’. We look at it more broadly when it comes to digital finance because we recognise that the digitisation of finance is here.”

In short, there is a shift in how the Government wants the sector to be viewed: no longer focused on speculative trading but on broader applications, including payments, tokenisation and regulated stablecoins.

In 2026, that framing becomes more important. The Bermuda Monetary Authority is advancing a new Payment Services Act, which would bring wallet providers, payment-processing platforms and hybrid digital asset payment businesses directly into a licensing regime. The authority also released a discussion paper on asset tokenisation this year.

Industry observers say these steps will matter as global rules tighten. The Genius Act in the United States prohibits interest-bearing payment stablecoins, while Bermuda’s regime continues to allow them under regulated conditions. The European Union is phasing in its own stablecoin rules with reserve, disclosure and governance requirements.

In 2026, Bermuda’s beneficial-ownership refinements seek to keep the island aligned with global standards before the CFATF evaluation. The POCA amendments seek to strengthen areas where global assessors have increased their expectations, including supervision of trustees, reporting of suspicious activity and regulation of financial flows.

The compliance burden is increasing. Companies must ensure that their ownership structures are disclosed under the new Beneficial Ownership Act, that their anti-money-laundering governance meets the upcoming POCA standards and that their business models fit within whatever final form the Payment Services Act takes.

The stakes are high. A strong CFATF evaluation builds Bermuda’s credibility with correspondent banks, institutional investors and international regulators. A weaker one could hinder cross-border operations for financial and digital asset businesses, and affect how Bermuda’s regulatory regime is viewed around the world.

Still, Mr Burt, and many in the industry, argue that Bermuda’s early start leaves it well prepared. “There is advantage to being first at the table,” Henry Tucker, managing partner at Harneys Bermuda, has told the Gazette.

The island has built a full licensing regime for exchanges, custodians, wallet providers, token issuers and stablecoin operators, and has built supervisory capacity that some newer entrants are still developing. The Government continues to position the island as a premium, regulated hub rather than as an anything-goes offshore outlier.

As Mr Burt said in November 2025: “I think that you would compare Bermuda regulations to anywhere around the world and see that we are best in class.”

Taxation

United States’ import tariffs have dominated headlines, with taxes even placed on goods from uninhabited islands.

Bermudian retailers are turning away from American suppliers as the average tariffs have been 15.5 per cent, and even as high as 50 per cent.

“Most of everything that comes from the United States has gone up in price,” said Mia Chambray, who runs natural beauty store Cassine with her mother, Jennifer Page. “We have had no break from our suppliers.”

As a result, Cassine prefers to do business elsewhere as much as possible.

“We are trying to buy from Europe, offering different goods in small batches,” Ms Chambray said.

Despite the challenges, Cassine reported having a good year.

The beauty industry has taken multiple hits from the tariffs introduced in April.

The majority of make-up is imported to the US from South Korea, France and Canada, all countries on US president Donald Trump’s tax list.

The industry is taking a further smash from a 50 per cent tax on imported aluminium, used to make beauty product tops and tubes.

Perfumer Isabelle Ramsay-Brackstone, of Lili Bermuda in St George, cancelled her US supply contracts to focus on Europe.

“I get a lot of goods straight from Italy and Poland without transiting through the United States,” she said.

Shawn Grant, vice-president of retail operations at Masters Home Centre, has seen the cost of hardware go up 20 per cent this year.

Construction has also felt the American tax heat. A recent tax on imported lumber, particularly from Canada, has pushed up the cost of cabinetry.

Jennifer and Paul Frias, of Frias Carpentry, said they are now going directly to Canada for cabinet supplies.

“We are not using our US supplier any more,” Mrs Frias said. “Our supplier in Canada has a superior cabinetry line as well as countertops, backsplashes and hardware. Prices are very reasonable.”

At the end of 2024, one of the biggest issues for local retailers was high shipping costs.

Twelve months later, it is still a problem.

Ms Page, of Cassine, said shipping and duty can sometimes cost the same as the item they are buying.

She questioned why small businesses in Bermuda do not get duty relief.

“We are paying the same fees as large retailers like Gibbons Company and we are just four people,” she said. “There is no tiered system and no incentive for small business to survive.”

Small businesses were also looking forward to the reopening of the Fairmont Southampton and the start of renovations to the Elbow Beach Hotel in the wake of its purchase by The Loren Group.

Many retailers have reported very little revenue from cruise visitors.