Stark quarterly Gross Domestic Product figures show the economy has substantially contracted for the first quarter of the year – the fifth quarterly reduction in a row.

Minister for the Cabinet Office Wayne Furbert revealed yesterday GDP fell by 4.3 per cent to $1,686.5 million in the latest quarter for which figures are available.

The Department of Statistics figures confirm the disastrous state of the Bermuda economy, one year on from the advent of the Covid-19 pandemic in March of last year.

The GDP fell 2.8 per cent for the first quarter of 2020; fell 15.7 per cent for the second quarter; fell 5.9 per cent for the third quarter; and, fell 4.0 per cent for the fourth quarter.

Now it has contracted again by 4.3 per cent.

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Mr Furbert said: “After adjusting for inflation, the GDP in constant prices for the first quarter of 2021 when compared to the 1st quarter of 2020 decreased by 4.3 per cent to $1,686.5 million.

“The decline in growth was influenced primarily by lower final consumption expenditure and declines in gross capital formation and the surplus external balance of goods and services.”

He added: “Final consumption expenditure fell by 3.8 per cent, reflecting declines in both household final consumption and government final consumption.”

Household final consumption decreased 3.6 per cent year-over-year to $706.3 million. Higher expenditure on durable goods was offset by lower expenditure on services, non-durable goods and semi-durable goods.

Mr Furbert said: “Consumption of services, which accounted for 74 per cent of total consumption, fell by 3.9 per cent year-over-year due to lower expenditure for restaurant services, accommodation services and air transport services which were all negatively affected by various Covid-19 pandemic restrictions.

“Spending on cleaning services also fell during the period. For non-durable and semi-durable goods, spending fell 3.9 per cent with fewer purchases of fuel and personal care goods which offset small increases in food, liquor and clothing expenditure.

“In contrast, spending on durable goods grew by 3.9 per cent due largely to increased expenditure on motor vehicles.

“For Government final consumption, a 4.6 per cent decline during the quarter was due to lower payments for materials and supplies, travel, legal services, insurance and rental of buildings.

“Payments for wages, salaries and employee overheads decreased with lower spending on overtime pay and superannuation contributions. In contrast, expenditure related to local service providers, medical supplies and medical equipment grew during the period due to the coronavirus public health emergency.”

The minister explained: “Gross capital formation (i.e. investment in fixed assets) fell 7.0 per cent to $208.7 million.

“Gross capital formation related to construction registered a 14.3 per cent decrease with less construction activity for large projects offset by increased activity in new residential construction, and civil works such as road, dock and bridge refurbishments.

“Investment in machinery and equipment increased 2.3 per cent attributed to the importation of communication equipment, transport equipment, wooden and metal furniture.

“The external balance of goods and services decreased 4.1 per cent to $581.9 million. This decline reflected mostly lower receipts for the exports of goods and services which fell 5.5 per cent due to decreased visitor expenditure compared to Quarter 1 of 2020 and a contraction in revenue earned from financial services, ICT services and fuel sold to visiting airlines.

“Imports of goods and services decreased 7.5 per cent as payments fell for passenger transport, travel services, professional and management services as well as fewer payments for imported fuel and some equipment such as magnetic resonance imaging apparatus.”

The Quarter 1, 2021 Quarterly GDP by Expenditure publication is available online at https://www.gov.bm/quarterly-gross-domestic-product.

The public is advised to read the concepts and definitions on the last page of the publication prior to reviewing the data.

• To read the GDP bulletin in full, click on the PDF under “Related Media”.