~ Pandemic restrictions and reduced tourism challenged economic growth ~

Today, the Minister for the Cabinet Office, the Hon. Wayne Furbert, JP, MP, released the Quarter 3, 2020 Quarterly Gross Domestic Product (GDP) by Expenditure publication; and he stated that due to restricted economic activity caused by mitigation efforts to contain the spread of COVID-19, there was a decrease in the third quarter GDP.

Minister Furbert explained, “After adjusting for inflation, the GDP in constant prices for the third quarter decreased by 5.9 per cent to $1,437.0 million.  

“As the public will appreciate, last year our economy was significantly challenged due to the Covid-19 pandemic. Like other jurisdictions around the world, Bermuda was not alone in seeing a decline in its quarterly GDP.  

“The weakened growth was influenced primarily by lower household final consumption on services such as transport, accommodation and catering, all of which were affected by limits on economic activity for businesses in these industries.” 

In analyzing the components, the Minister continued, “Final consumption expenditure fell by 7.5 per cent led by the decline in household final consumption, which offset growth in government spending on goods and services.

“Household final consumption for individual goods and services decreased 9.9 per cent year-over-year to $734.1 million. Higher expenditure on durable and non-durable goods was offset by lower expenditure on services.”

The Minister highlighted the fact that there was a notable increase in the third quarter in the purchases of larger items.

He said, “For durable goods, spending increased 12.9 per cent with greater purchases of furniture and motor vehicles. Consumption of non-durable goods also grew marginally by 0.7 per cent due largely to food and beverage expenditure.  

“In contrast, spending on services decreased 10.9 percent, reflecting lower expenditure on air transport, accommodation, catering services, personal care services, domestic services and legal services. 

"For Government Final Consumption, a 2.0 per cent growth during the quarter was due to higher spending on goods and services while payments for employee overheads and other personnel costs decreased.”

The Minister further explained, “Gross Capital Formation (i.e. investment in fixed assets) fell 11.2 per cent to $205.2 million (Table 1).  Gross Capital Formation related to Construction registered a 17.2 per cent decrease while investment in Machinery and Equipment fell 2.8 per cent due to reduced construction activity during the final phases of major construction projects.” 

“In contrast to other components of the quarterly GDP estimates, the net surplus on trade in goods and services increased 4.5 per cent to $289.2 million.  

“This growth reflected mostly lower expenditure on the Imports of Goods and Services. Payments for the Imports of Goods fell by 12.0 per cent due to decreases in imported fuel, food and finished equipment. 

“Imports of Services decreased 33.0 per cent as payments fell for passenger and freight transport, travel services and construction services.  Exports of Services were 10.9 per cent lower, mostly due to travel restrictions. Exports of Goods also fell 33.0 per cent due primarily to less fuel sold to visiting airlines.”

The Minister concluded by saying, “We recognize that the challenges of the pandemic have severely tested us as a country. But I believe that we have a resilient economy. We are seeing some encouraging activity with residents supporting our key industries and spending locally. 

“I also believe that we are an innovative Government, and our economic stimulus plans; the implementation of policies to support and strengthen our local business; and our engagement to attract those to come to Bermuda to work are bearing fruit and we expect that will continue in the months to come.”

The Quarter 3, 2020 Quarterly GDP by Expenditure publication is available online at https://www.gov.bm/quarterly-gross-domestic-product.  The public is advised to read the concepts and definitions on the last page of the publication prior to reviewing the data.