the Island begins pulling out of recession.

Bank of Butterfield chairman the Hon. Sir David Gibbons and Bank of Bermuda president Mr. Donald Lines indicated cautious optimism about the end of the recession but said recovery would be slow when it comes.

The two bankers were interviewed following the release last week of statistics showing April visitor arrivals improving for the first time in 17 months while first quarter results showed the Island performing at historically low levels.

Airport arrival figures released this week showed a drop of 11.4 percent during the first week of June compared to the same period last year.

Sir David and Mr. Lines described the recession as the worst since the Second World War. Bermuda's recovery, they said, depended solely on US economic recovery.

"One has to be optimistic,'' Sir David said. "I'm feeling cautiously optimistic for the first time in a couple of years. There is a definite body of opinion (in the States) that the recovery is for real.'' However, the banker cautioned that the months ahead would continue to place hardship on Bermudians, with continuing mortgage foreclosures against homeowners unable to meet their commitments.

"The current situation is not good,'' he said.

Mr. Lines described Bermuda's economic situation as delicate and saddled with fundamental problems.

"I don't see any massive rebound in tourism revenues this year,'' he said, "Looking to next year, I would say you'd see a modest recovery but it will depend on the quality of service we give and the attitude workers bring to the workplace.'' Mr. Lines warned that recovery could easily be jeopardised by labour-management disputes, work stoppages or massive increases in costs.

Continuing softness in international business -- the second pillar of Bermuda's economy -- was another concern.

"International business growth is flat,'' he said. "The underlying environment (for international business) is still soft. Any growth we can expect will be sluggish.'' In the long term, he said he was concerned the Island would be hobbled by more cutbacks at the US Navy base.

He was heartened by people in the tourism industry who were doing a good job and who had reacted well to their recession-induced lower incomes. Recessions, he said, were about people readjusting their values.

"When the cock comes home to roost, everyone has to change their values and expectations,'' he said.

But Mr. Lines said Bermuda had made tough times seem worse through excessive negativism.

"The message that has been coming out is far more negative than the reality,'' he said. "We've got to be more positive. And we've got to be more restrained in our comments.'' During the next half year, Sir David said the Island economy could look forward to the start of big construction projects such as the mass burn incinerator, the new prison, the new Bank of Bermuda building on Bermudiana Road and the rebuilding of the Bank of Butterfield's Trader's Gate building on Front Street.