The poor will get poorer and there will be fewer jobs in Bermuda as a result of the recession which has hit the United States, according to the Government's most senior economic advisor.

Dr. Andrew Brimmer predicted that if the recession in the United States continued into the early months of next year the Island's economy will suffer, particularly in the tourism sector. He said: “One should expect the effects of the US recession to spill all over the Island. The principal reason is the sharp reduction of travel from the US mainland and the related decrease in foreign visitors' spending. These negative effects are already evident and they are more likely to worsen than to diminish in the months ahead.” But if the recession in the US continues longer than the first few months of 2002, things could get worse on the Island and the Government will have to take further measures to deal with the downturn, he said. He said: “If the recession in the US is deep and lasts longer than projected, the adverse impact on Bermuda will also be greater than is now anticipated. Under those circumstances, the Government of Bermuda is positioned to adopt counter-cyclical measures to ameliorate the effect of the recession on Bermuda's economy.”

Speaking at a business luncheon, he revealed the grim results of a survey he carried out with the Ministry of Finance on the implications of the US economy on Bermuda.

He added: “Given the close links to the US, of which reciprocal travel is the strongest, the recession will have a direct and substantial impact on the country. The overall effect will be a much-reduced level of Bermudian economic activity in the short to medium term.”

Dr. Brimmer, who is the principal economic policy advisor to the Government, said that it would impact most on the poor, who would see their fortunes worsen.

He said: “As jobs rise more slowly or actually decline somewhat, aggregate household income will most likely show little improvement. Moreover, the loss of purchasing power will be concentrated primarily among the low-income segment of the populations.”

Dr. Brimmer added that those at the lower end of the earnings scale spent more money in general, and that a decline in their pay would mean that the retailers will also be further hit by the economic decline.

There was little good news for retailers, with retails sales expected to contract 2.2 percent for 2001 and rise only 0.5 percent in 2002. But this does not take on board inflation, which is currently running at between 2.8 and three percent, which will take the figures down even further.

And he warned that the Gross Domestic Product, which is a measure of the growth of the economy, is expected to fall by 1.5 percent in 2002. This compares to a growth of 2.7 percent in 2000 and an estimate of a fall of 0.4 percent in 2001.

He said that for 2001 the occupancy rates at hotels are believed to have fallen 20 percent and may fall a further 15 percent over 2002.

He said: “The major factor underlying the downward revision was the sharper than projected reduction in the volume of visitor expenditure for the year.”

Visitor arrivals will also be down, with the total figure down 15.8 percent during 2001 and down 12.5 percent on that in 2002.

He added: “Looking ahead to 2002, the overall Bermudian economy is expected to exhibit continuing weakness. As a by-product employment will rise further.”

Dr. Brimmer also said that the Government would get $24 million or four percent less in revenue, but their spending would go up as more social assistance would be required by the people of Bermuda.