through the worst recession since the 1930s, the Government reported this week. With improvements in tourist arrivals, construction starts and employment, the Finance Ministry's Economic Review predicts that 1993 will be better than 1992. Here, The Royal Gazette takes an in-depth look at Government's review of last year and what lies ahead in 1993.

The mass exodus of non-Bermudian workers during the last three years appears to be over, according to Government.

New statistics show that a decline which has seen the loss of 1,080 work permit holders since August, 1989, has stopped.

During that period, there has been a 38.6 percent reduction in new residents, which includes permit holders and their dependents.

In 1989, 6,200 new residents arrived on the Island, compared with less than 3,900 last year, according to `Bermuda -- An Economic Review' which has just published by the Ministry of Finance.

The decline had a significant negative impact on the local economy, including loss of rental earnings by Bermudian property owners and lower retail sales volumes.

The economic review also reveals the full extent of the deterioration of the local economy over the last few years.

Gross Domestic Product in real terms contracted by 2.5 percent in 1991/92, following a total contraction of 3.5 percent over the previous two years. At the end of March, 1992, the level of GDP was below that of 1986/87.

The Ministry of Finance estimated that GDP in real terms will contract by between 1.5 and 2 percent in 1992/93.

Employment fell by 2.8 percent to 33,650 during 1992, with non-Bermudians holding 6,194 jobs -- a decrease of 707 or 10.2 percent from the level of August, 1991.

The number of job vacancies declined by 13.1 percent or 551, coupled with more people being placed on shorter hours or being laid off during winter.

There were 506,237 visitor arrivals last year, a decline of 1.7 percent over 1991, which itself was the worst performance since 1973.

One of the few bright spots on the horizon was the performance of Bermuda's international business sector.

During 1992, 747 new exempted companies, exempted partnerships and non-resident companies were registered, a net increase of 182 to 7,271.

Provisional Balance of Payments figures for the first half of 1992 indicated a modest surplus of $2 million.

Although a surplus was likely to be recorded for the third quarter of 1992, the current account for the year as a whole was likely to be a "rough balance''.

In conclusion, the Ministry said local companies will have to do more than cut costs if they want to return to profitability once the recession ends, Government has warned. Productivity must be increased and workforces have to become more flexible.

"In some sectors, it is doubtful if this will be achieved by attrition alone,'' the Ministry stated. "This would suggest that the labour market is likely to remain soft for much of the 1990s and that there will not be a return to full or over-full employment that was seen in the 1980s.'' Although the current recession was the most severe to hit Bermuda since the 1930s, the economy as a whole had absorbed the shocks "very well'', said the Ministry.

"Unemployment has increased but remains low by international comparisons, reflecting the preference of employers to place staff on short hours or temporary lay-offs rather than create redundancies.'' There were several indicators that the worst of the recession appeared to be over: A sharp increase in construction starts in the third quarter of 1992; A 4 percent increase in visitors in the fourth quarter of 1992; A modest 0.6 percent increase in loans and advances in the third quarter; and A 2.7 percent increase in the value of retail sales in the three months to the end of November.

"The prospects for the economy in 1993 are better, particularly as the level of consumer confidence in the US continues to strengthen,'' said the Ministry.

"This should translate to improved tourist arrival figures and feed itself through the economy.'' Increased air capacity, with the possibility of a third British Airways flight in April, and cruise ship capacity should also boost the hospitality industry.