US-Bermuda Economic Ties Become Stronger
Bermuda and the United States expanded their overall economic relationship between 2008 and 2010 growing from $60 billion in two-way trade in 2008 to $80 billion by 2010, says a recently released Business Bermuda economic impact study.
Although the economic recession has been difficult for both countries, recent Business Bermuda economic analyses by US consultancy firm Albright Stonebridge Group shows that Bermuda’s economic relationship with the United States strengthened rather than weakened in the last three years.
In all, Bermudian international service and multinational holding companies sustained 310,000 US jobs in 2010. according to official US government economic data.
The United States exported $10 billion in US goods and services on average to Bermuda, and in turn, Bermuda exported about $23 billion annually to the US economy including as much as $12 billion annually in recovered US insured property losses.
Bermuda’s relationship with the United States did weaken in some sectors like providing investment funds, tourism, and shipping services during the recession. By 2010, growth returned to these accounts as the first signs of bilateral recovery of flows of trade.
“Building its economic partnership with the United States, by 2010, Bermuda, for the first time ever, was the most important international provider of insurance services to the United States,” concluded Albright Stonebridge Group executive vice-president Dr. Charles Ludolph in his report, titled “US-Bermuda Economic Relations: Economic Impact Study 2011.”
The report was officially released by Business Bermuda in October.
“This preeminence is likely attributable to a host of factors that reflect business decisions on how to originate reinsurance and insurance services in a global economy,” said Dr. Ludolph. “That is, while Bermuda rose in its relative standing as a trading and investment partner with the United States in 2010, this mostly proves that financial companies doing business in the United States continued to find their Bermuda partnership strong.
“Bermuda also showed increased significance in terms of flows of trade with the United States in research, development and testing services, and banking and investment services.”
US-Bermuda trade in these two sectors grew by $4 billion in the last two years alone, said the report. In 2010, Bermuda became the fifth most important us export market for banking and investment services and the 12th most important destination in the world for US testing services.
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Again, there are many reasons possible why Bermuda advanced relative service markets like London, Dublin, Zurich, and Munich, but the more important fact is that Bermuda has sustained its strong economic relationship with the United States relative to the rest of the world in the last ten years,” said Dr. Ludolph
In addition to the strong bilateral economic relationship, the data shows that Bermuda remains a key investment destination in the world economy. Bermuda’s international businesses from insurance to semiconductors have investment in the United States that generates more than $40 billion in product annually.
“This is a key generator of employment and taxes for the US economy,” said Dr. Ludolph. “The surprisingly large flows in Research & Development and testing services with the United States as reported above reflects the investment positions of numerous us and Chinese semiconductor and video game equipment manufacturing companies that chose Bermuda as their corporate domicile.
“Companies like Chipmos, Freescale, Marvell, AOSL, and Contel domiciled in Bermuda as part of a global pattern of manufacturing in China and design and sales in California, Texas and Arizona.
“Bermuda now imports more than $3 billion of computer chip testing services from the United States that are then translated into computer chip manufacturing throughout Asia.”
The Business Bermuda economic impact study demonstrates the continuing strength and dynamism of the Bermuda-United States economic relationship, said the organisation.
“It shows that Bermuda provides a market and investment community that strengthens the United States’ economy and the livelihood of its workers and citizens, even throughout these challenging economic times,” said a Business Bermuda spokesman.
CEO of Business Bermuda Cheryl Packwood [pictured at top] said of Dr. Ludolph’s economic analysis: “His comment, ‘It shows that Bermuda provides a market and an investment community that strengthens the United States economy and the livelihood of its workers and citizens even throughout these challenging economic times’ bodes well for continuing our strong relationship with the United States.
“Such research is vital to the Bermuda Government’s lobbying in the United States and provides concrete statistics for the world to understand the importance of our economic relationship to the United States and other major jurisdictions.”
Business Bermuda works with Bermuda-resident companies and the Bermuda Government to develop and promote Bermuda internationally as the jurisdiction of choice for international business.
