Report: ‘Recovery Unlikely Until 2012′
Bermuda’s recession-battered economy is unlikely to rebound until 2012 — with only a “modest recovery” forecast for next year — as the worst financial downturn the island has experienced since the Great Depression continues to take a toll on local businesses and the job market, says the Finance Ministry’s National Economic Report.
The report anticipates Bermuda’s economy will continue to decelerate throughout 2011 with the island’s standard of living dipping slightlybut inflation remaining steady.
“… The current economic slowdown is the most severe one to have affected Bermuda since the 1930s,” said the report. “Under these circumstances it is imperative that Bermuda addresses the issue of its competitiveness in key economic sectors. If everyone in the community is prepared to pull together, Bermuda could then be well placed to take advantage of the eventual upturn in overseas economies, particularly the United States.”
“Recovery in 2011 will be sluggish. While the US recovery will boost service exports, there is a downside risk to growth from fragile private sector investment and consumption. Households will remain constrained in 2011 by job losses and pay curbs.”
The report said both Bermuda’s tourism industry and the off-shore financial services sector may benefit in 2011 from a “slow and steady growth pattern” of economic growth in the US .
” … there is cautious optimism of a moderate recovery in the tourism sector which could generate a more positive contribution to GDP in 2011 and 2012,” said the study. “The global recession has had a negative impact on the international business sector in 2010. However, this sector of the economy, especially the (re)insurance market, remains strong. With the steady growth of the US economy, the (re)insurance market should be in a very good position to capitalize on any future upturn in economic conditions.
“There is also a focus on diversification of the economy through the further enhancement of the insurance linked securities regime, as well as the introduction of shariah compliant insurance and investment products. Growth of the international business sector may be less robust than in previous years but will still remain as the primary driver of the Bermuda economy.”
After shedding more than 400 jobs in 2010, the Finance Ministry expects the construction sector to recover slightly in 2011 with work commencing on major new projects like the King Edward VII Memorial Hospital addition.
The full 27-page report appears below, click ‘Full Screen’ for greater clarity:
