Bermuda’s gross domestic product increased by 0.1 per cent to $6.5 billion in 2018, the Government announced today.

GDP is a measure of economic activity that captures the value of goods and services produced within a country during a given period.

Including inflation, GDP in current prices increased by 1.7 per cent in relation to 2017.

Overall, eight of 18 industry groups contributed positive growth to the real GDP, the report compiled by the Government Department of Statistics reveals.

The largest increases in absolute real terms were recorded for the construction and quarrying industry, which grew by $33.9 million and international business, which grew by $24.7 million.

The international business industry was the largest contributor to GDP, representing 25.2 per cent of total GDP, the report shows.

In contrast, value added in the arts, entertainment and recreation industry fell by $36.6 million and the wholesale and retail trade industry decreased by $15.5 million.

Compensation of employees accounted for 55.7 per cent of the total cost of producing the GDP at current purchasers’ prices in 2018.

Operating surplus/mixed income and combined taxes less subsidies (on production and products) represented 28.7 per cent and 11.5 per cent of the GDP at current purchasers’ prices, respectively. Depreciation accounted for 4.1 per cent.

In 2018, non-financial corporations contributed 43.6 per cent of the total GDP at current basic prices mostly concentrated in real estate activities, professional, scientific and technical activities, and wholesale and retail trade, the report said.

Financial corporations contributed 37.7 per cent of total GDP at current basic prices with general government contributing 10.8 per cent and households contributing 7.9 per cent.

Gross national disposable income reached $7.3 billion at the end of 2018, up 1.2 per cent from 2017. After adjusting GNDI for consumption expenditure, gross national savings was measured at $2.9 billion, the report said, which represented a 3.4 per cent increase year-over-year.

Of the total savings, Government said, $1 billion was spent on gross capital formation (investment in capital goods) which positioned the Bermuda economy as a net lender to the rest of the world in the amount of $1.9 billion.

Government said that it has rebased the island’s GDP from 2006 to 2013 in order to keep up with the evolution of prices and capture more current economic conditions. The rebasing exercise was completed with the assistance of the Caribbean Regional Technical Assistance Centre.

The 2018 GDP publication reflects changes to the industry structure and levels of the annual GDP estimates, Government said. These changes are the result of an updated Supply and Use Table for Bermuda as part of the implementation of the 2008 System of National Accounts, which serves as the international statistical standard for the production of statistics on GDP.

Wayne Furbert, Minister for the Cabinet Office, said: “The exercise to update the SUT and the GDP base year was a collaborative process between the Caribbean Technical Assistance Centre and the Department of Statistics over a five-year period ending in August 2019.

“The DOS finalised an SUT with 2013 data as this was the most recent year with supporting data from the Household Expenditure Survey. The finalised SUT allowed for replacing the outdated 2006 base year for estimating GDP in constant prices which is used to measure real growth rates in the Bermuda economy.

“The updated GDP estimates will give a realistic and integrated view of the economy that is more suitable for policy and analytical use and reflects more closely the current economic dynamics.”

Based on the balanced SUT, the GDP level in current prices for the base year 2013 has been revised up by 14.5 per cent, Government said, adding that the increase in the rebased GDP series is not uncommon, as other countries which implemented recent rebasing and application of the 2008 SNA showed the following increases in GDP in current prices: Cayman Islands +27.5 per cent in 2015 GDP; Maldives +19.5 per cent in 2014 GDP; Tanzania +27.8 per cent in 2013 GDP; Kenya +25.3 per cent in 2013 GDP; Bahamas +27.6 per cent in 2012 GDP; and Zambia +25.2 per cent in 2010 GDP.

Bermuda’s GDP series, Government said, now reflects a more accurate picture of the size and structure of the economy and incorporates new activities that were previously not captured in the computational framework. The relevance of the GDP series has been enhanced and is now more internationally comparable with other jurisdictions, it said.

The 2013 base year series features 18 industry groupings versus the previous 15 industry groupings. In support of evidence-based decision making, the rebased GDP provides a better understanding of which industries are driving growth since emerging industries such as the Information and Communication industry are now explicitly featured, Government said.

The year-over-year GDP breakdown by industry is:

Agriculture, forestry and fishing: decreased 8.5 per cent in 2018 or $1.7 million. The decline in value added was attributed primarily to a fall in fishing activity.

Manufacturing: declined 2.5 per cent or $900,000 reflecting mostly a decrease in value added related to non-metallic mineral products, fabricated metal products and bakery products.

Electricity, water supply and waste management: was $6 million or 9.2 per cent higher. This was due mostly to a rise in the contribution of the electricity sub-industry grouping.

Construction and quarrying: rose 14 per cent in real terms or by $33.9 million. This growth was attributed to increased construction activity associated mainly with residential renovation, airport development and hotel development.

Wholesale and retail trade: recorded a decrease in value added of 4.5 per cent or $15.5 million. Retail trade activities decreased 5.8 per cent and was influenced primarily by lower retail sales of motor vehicles, clothing, building materials, furniture and sales at pharmacies. Wholesale trade activities also decreased by 1.1 per cent.

Transportation and storage: increased 1.3 per cent or $1.7 million in 2018 attributed mostly to an increase in value added related to airport management services that offset a decline in freight transport.

Accommodation and food service: was 4.7 per cent or $12.7 million lower in 2018. Value added for hotels decreased by $7.8 million or 4.7 per cent. This decline was influenced by a rise in the cost of room and food sales that exceeded the growth in output associated with an increase in the number of bed nights. Food service activities fell $6.1 million or 5 per cent.

Information and communication: decreased 4.6 per cent or $8.3 million in 2018 driven mostly by an overall decrease in telephone, telegraph and telex communications.

Financial and insurance activities: Increased 0.9 per cent or $7.9 million. This growth was attributed mostly to a rise in the value of premiums received by non-life insurance companies. In contrast, financial service activities registered a small decline as reflected in declines in value added by trust companies and holding companies that offset small gains in activities of the commercial banks.

Real estate activities: rose 1.8 per cent or $16.8 million. The increase was reflected mostly in a 3.2 per cent rise in the imputed rent for owner-occupied dwellings as well as a 0.3 per cent increase in real estate activities with leased property.

Professional, scientific and technical activities: was 1 per cent or $3.9 million lower in 2018. Declines in legal services and accounting services offset growth experienced in management consultancy activities.

Administrative and support services: grew 4.3 per cent or $5.4 million in 2018 due mostly to private security services and cleaning services.

Public administration: decreased 1.1 per cent or $3.8 million due mostly to lower spending on goods and services.

Education: decreased 1.6 per cent or $2 million in 2018 reflecting declines in the contribution of both private and public education.

Human health and social work: increased 2.8 per cent or $9 million in 2018. Private health activities, which grew 8.2 per cent, experienced the largest increase in value added in 2018.

Arts, entertainment and recreation: decreased significantly in 2018 by more than half of the previous year’s value, reverting to levels comparable to 2014 which precedes the lead up to America’s Cup activity starting in 2015.

Other service activities: decreased 1.3 per cent or $800,000 in 2018 attributed mostly to a decrease in the value added of business and employers membership organisations and a lower value added for laundry and dry cleaning services.

Activities of households as employers: fell 4.2 per cent or $600,000 in 2018. This decrease was reflected fully in compensation of employees which is the main component of value added.

International business activity: rose 1.5 per cent or $24.7 million in 2018. This industry was the largest contributor to GDP, representing 25.2 per cent of total GDP. Businesses engaged in insurance brokerage and insurance risk-taking services, including insurance underwriting and reinsurance services, experienced growth in value added. Insurance management services and financial services such as portfolio management services experienced declines in value added due mostly to lower performance-based bonuses.