HAMILTON,. Bermuda, CMC – The Bermuda 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 Hayward told a news conference that the local economy is now experiencing “real growth” recovering from the coronavirus (COVID-19) pandemic over the previous three years.
He also suggests 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 directly results from 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 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 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 hugely positive.
“When our economy continues to improve, it gives us greater capacity to adjust some of the challenges we’ll have with the cost of living. The budget period that is coming up allows us to look at how we’re taxing Bermudians to see if further adjustments 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 country’s best interests moving forward.”
Asked by reporters whether or not time was running out for tax changes to be added to the budget before its presentation, Hayward replied, “We have a period 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 resets itself, so I wouldn’t consider that 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 tourism revenue had also increased 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 by 3.5 percent during the quarter. Wages, salaries, and personnel training were the primary drivers for the increase.
Hayward said business investment grew by one percent to US$212.1 million in the quarter. Investment in machinery and equipment increased by 5.5 percent owing to higher imports of special-purpose motor vehicles, radio navigational aid apparatus, and medical equipment. Investment related to construction fell by 3.2 percent.
The island’s trade balance rose by 0.1 percent to US$442.7 million due to 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 most significant 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 more significant 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.
and then 