Minister Grant Gibbons told members of the Chamber of Commerce yesterday.

While the tourism sector has declined, international business and the construction industry continue to drive the economy forward. Bermuda is also blessed with low and stable rate of inflation, and low unemployment, he said.

About 4.5 percent of Bermuda's workforce is employed by international business which contributes 79 percent to the Island's foreign currency earnings.

In 1996 international companies brought in $631 million in foreign currency earnings, a 20 percent increase over last year. The companies also paid $54 million in taxes to government, according to the Archer Report.

The tourism sector continues to suffer. By the end of June, tourist spending had also fallen by 3.2 percent. In the year-to-date, air arrivals are down 3.6 percent, while total tourist arrivals including cruise ship passengers are down 2.2 percent compared to last year. The number of bednights fell by 3.6 percent, but it was the smaller tourist accomodations which felt the effect the most.

Guest houses had a 25 percent fall in business in the 12 months from October 1996. Places with 12 beds or less had a fall of 14 percent, while accommodation at housekeeping cottages fell 11 percent. Small hotels experienced a nine percent decline. Meanwhile large hotels and cottage colonies had a less than one percent fall off in business over the same period.

In the retail sector, sales for the first nine months of 1997 were estimated at $381.4 million, a real increase of 1.4 percent after adjusting for inflation.

In the construction sector projects worth about $60 million were started during the first half of the year compared with $20 million in 1996.

Long term growth in jobs has primarily been in the international business and local services sectors, Dr. Gibbons said. About 500 new jobs were created in 1996 with the professional, technical, administrative and managerial positions having the largest increases. Dr. Gibbons also summarised the changes Government was making in relation to the economy. A major tax review, a health care review, a five year strategic marketing plan for tourism were all part of the package. Legislation dealing with mandatory pension plans, investment licencing, trusts, partnerships and insurance sectors are in the process of being drafted.