HAMILTON,. Bermuda – Bermuda's government says the local economy has grown by 2.3 percent during the second quarter of this year despite registering 4.6 percent growth in the first three months of 2023.
Economy and Labour Minister Jason HaywardEconomy and Labour Minister, Jason Hayward, told a news conference that the local economy is now experiencing “real growth” recovering from the COVID-19 pandemic over the previous three years.
He is also suggesting that the David Burt administration could announce tax breaks when the national budget is unveiled in February next year to deal with the rising cost of living.
Hayward told reporters that the improved economic situation is as a direct result of increased household and government expenditure, along with business investment.
According to figures released here, gross domestic product (GDP) increased 3.9 percent during the second quarter, while consumer spending increased 3.6 percent year-over-year to US$809.1 million.
The government said wage growth is now outpacing the pre-pandemic figure, with employment income for the period up 3.9 percent on 2022 levels. Pay increases were noted in international business, banking, business services and public administration.
Hayward said that 2019 was a time of very positive economic performance, and in 2020 Bermuda was hit by the pandemic. He said the following two years were recovery years, and in 2023 ”what you see is the economy moving beyond pre-pandemic economic performance to real growth. That’s extremely positive.
“When our economy continues to improve, it gives us greater capacity to adjust some of the challenges that we’ll have with the cost of living. The budget period that is coming up gives us an opportunity to look at the way we’re taxing Bermudians to see if there are further adjustments that can be made in our tax system to try to create a buffer for some of those high cost-of-living considerations that residents are having.”
Hayward did not elaborate on the proposed tax breaks, telling reporters “I can’t speak to that, but we have had consultations with the business community, and they have made their submissions to the Minister of Finance.
“It’s for finance and their team, along with the Cabinet, to determine what we believe is in the best interests of the country moving forward.”
Asked by reporters whether or not time was running out for tax changes to be added into the budget before its presentation, Hayward replied “we have a period of time in which we table the budget, and we’re well within that particular time frame.
“We will have a budget tabled next month,” he said, acknowledging that while growth in the second quarter was less than in the first three months of the year, that did not mean the economic engine was running out of steam.
“Normally when you have strong economic performance in the first quarter, the economy kind of resets itself, so I wouldn’t consider that to be a decline in growth.
“What we see is a quarter-by-quarter basis growth is measured and factored by different circumstances, so we could have strong growth in the second quarter of 2022, which means that the growth that you have in the second quarter of 2023 wouldn’t be as great as you experienced in the first quarter.”
The government said that revenue from tourism had also increased on last year, although visitor arrival numbers have yet to surpass pre-pandemic levels.
Estimated expenditure by air visitors increased to US$110.8 million from US$97.8 million for the same period last year.
The government also spent more money during the period, with expenditure increasing 3.5 percent during the quarter. Wages, salaries and personnel training were the primary drivers for the increase.
Hayward said that business investment grew one percent to US$212.1 million in the quarter. Investment in machinery and equipment increased 5.5 percent owing to higher imports of special-purpose motor vehicles, radio navigational aid apparatus and medical equipment. Investment related to construction fell 3.2 percent.
The island’s trade balance rose by 0.1 percent to US$442.7 million as a result of growth in receipts for the export of goods and services by 2.7 percent.
In the second quarter, 173 new businesses were registered in Bermuda, bringing the complete business register to 16,226.
“International business represents the largest portion of our economy, so growth in international business will be weighed heavier than growth in other sectors. That has been our reality for decades and will continue to be our reality until we get greater levels of diversification.
“The government continues to facilitate the expansion and sustainability of Bermuda’s economy by creating a business environment that allows businesses to thrive.
“The government will continue to execute the strategic initiatives outlined in Bermuda’s Economic Development Strategy to ensure Bermuda experiences sustainable economic growth and development,” Hayward added.
