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Bermuda’s Economy
Backdrop to the 2013 Budget
Chamber of Commerce
February 2013
Chamber The Bermuda
Of Commerce
Bermuda Economy
Realities behind the budget
– Shrinking tax base
– Tight bank lending
– Growing public service costs
– Increasing deficit and other liabilities
2011 Highlights
Gross Domestic Product
• Third consecutive year of
decline
• Economic growth stifled
by job losses and
business closures
• Ten of fifteen industries
shrank
• Strongest impact felt in
Construction and
International Business
sectors 2009 2010 2011
$5,806 million
$5,757 million
$5,557 million
Data Source: Bermuda Department of Statistics
Bermuda Economy Unbalanced employment : wealth-consuming activities are
growing…
Data Source: Bermuda Department of Statistics
Bermuda Economy
…while wealth creating activities shrink
Data Source: Bermuda Department of Statistics
Bermuda Economy Banks are squeezed by higher non-
performing loans and lower profits.
Note: all data in percentage terms, Data Source: The Bermuda Monetary Authority; Quarterly Banking Digest
Bermuda Economy
The cost of Government employees is
rising…
Full cost includes
retirement benefits and
special compensated
absences.
Data Source:
Consolidated Financial
Statements and Budget
Books
Bermuda Economy
…and the price of their future pensions and
health benefits is growing
Figures in Millions
Data Source:
Consolidated Financial
Statements and Budget
Books
Bermuda Economy Bermudian population is ageing …
0
5,000
10,000
15,000
20,000
25,000
2000 2005 2010 2015 2020 2025 2030
Number of Bermudians aged 65 or older
Number of Bermudians aged 15 or under
Data source: Bermuda population projections 2000 - 2030 9
Bermuda Economy
...resulting in fewer working taxpayers
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2000 2005 2010 2015 2020 2025 2030
Total dependent Bermudians
Bermudian Working population
Data source: Bermuda population projections 2000 - 2030 10
Bermuda Economy
Solutions:
• Private industry growth
• Smaller public sector
• Influx of new workers
• Influx of foreign capital to alleviate
debt stress
• Privatizations
