Shadow Finance Minister E.T. (Bob) Richards predicts a tough year ahead for business in Bermuda during 2010.

Mr. Richards said a combination of the recent spate of murders and shootings along with a global economic downturn had negatively impacted the Island's economy and business community.

But Finance Minister Paula Cox was much more upbeat about the state of the economy and believes a sustained recovery led by the US and Canada over the next year will help to boost the country's tourism and retail sectors.

Ms Cox said that, on reflection, Bermuda had fared well given the global and local economic climates in 2009 and Government's policy response to the many economic and fiscal challenges.

"Looking ahead to 2010, every finance minister or minister of the economy in the world is hopeful that the signs of economic recovery now visible in the United States and other G7 (Group of Seven) countries will be sustained," she said.

"A sustained economic recovery in the United States and Canada will be particularly important for our local hospitality and retail sectors which have been particularly hard pressed over the last 12 to 15 months.

"Employees in these two sectors have been pressured financially as a result of shortened hours of work and lay-offs and in some cases redundancies. So there is no question that the hope for a more buoyant economy in 2010 is at the top of the wish list."

However, Ms Cox cautioned that any economic recovery - both global and local - was likely to be a long one and therefore the challenges of balancing the mix of policy responses to provide the best outcomes for businesses, families and retirees would be equally as tough in 2010 as it was in 2009.

She said there was reason for optimism about the prospects of the Island's international re/insurance market over the next year, which in turn should provide some stimulus to the rest of the economy.

Ms Cox added that while many large construction projects would concluded during the course of the year, the redevelopment of the King Edward VII Memorial Hospital, set to break ground in autumn 2010 would provide a continuation of work streams for the construction industry.

"I shall have more to say about Bermuda's economic prospects for 2010 next month when I present Government's National Budget for 2010-2011," she said.

Mr. Richards forecast that the next five months would be particularly hard for Bermuda and its residents as it came to grips with the reality of the escalating crime spree over the past month and the weakened economy.

"I think we are going to be in for a difficult year and I have been saying that all along," he said.

"What we need to do in this country is try to hold it together for this year and we need to get our social environment under control.

"It used to be that Bermuda was a great and safe place to live, but we can't say that anymore.

"There couldn't be a worse time for this type of thing to erupt when the economy is fundamentally weak."

Mr. Richards said that a number of factors which he had foreseen had been borne out, with retail suffering from a lack of tourists and locals spending their money in the domestic economy, allied to a drop off in the number of guest workers, and construction being hit by an absence of big projects in the 12 months ahead.

Equally worrying, he said, was the trend of companies outsourcing work overseas, but he held some hope that international business would remain strong in the face of increased competition from rival jurisdictions with everyone scrambling for business during these difficult times.

"I feel we have lags in play here that are playing themselves out and we have to keep a close eye on what is happening in international business - it seems to be stable, but I think that even if the business is stable there will be less jobs," he said.

"People are finding ways to get around the stupid work permits and term-limits by outsourcing, which is good for companies because it makes them more efficient, but it is not good for Bermuda's economy, but that is part of capitalism.

"Hopefully we will get some stability and continue to be stable in international business."

"It will be interesting to see what the Government is going to do about it because I think there are things we could do to lessen the blow - we need to try to get our act together now because if we can't get our act together then God help us.

"It is going to be a test of our national character now."

Shawn Crockwell, of the Bermuda Democratic Alliance (BDA), said the outlook for the Island over the first six to nine months of this year would be very challenging, with the impact of the recession and the corresponding loss of jobs locally ensuring economic activity was "anaemic at best" as many families struggle to meet basic expenditures.

Mr. Crockwell said that a further slowdown in construction spending as large developments were completed without any similar scale projects on the horizon presented more downside risk to economic growth; as did the risk of slow global growth negatively impacting Bermuda's foreign currency earnings through international business and tourism.

He also called on Government to manage public funds carefully and make sure that capital projects did not run over budget.

"We hope that Government provides a fiscally prudent budget this year, cutting out the fat where necessary, while ensuring that funds are available for public safety, education and capital projects that would spur economic growth," he said.

"It is imperative that Government better manages the public purse to ensure capital projects are kept on budget and limit any increase in borrowing. After all, it is the people's money that is being spent.

Mr. Crockwell said the BDA would look for Government to continue its efforts to encourage the start of work on new hotel developments at the Morgan's Point and former Club Med sites, thus boosting the construction and related industries, while ensuring that Bermuda's tourism product was well placed to take advantage when the global economy improves.

He added that Government should also leave no stone unturned in exploring innovative ways to provide incentives to retailers and hotels through prudent tax breaks, such as import duties, at the same time as following up on the recommendations in the Bermuda First Report to encourage growth in the international business sector.

"Jurisdictions like Switzerland and Cayman are constantly snapping at our heels," he said.

"If we fail to innovate we shall fail as a haven for international business."

He added: "It is the Alliance's assessment that 2010 will be bleak for Bermuda's economy. It would be irresponsible to say otherwise.

"The truth is that Bermudians are usually protected in a recession from job losses since guest workers are laid off first. The Alliance believes that things will get worse before they get better and we must be prepared for unprecedented lay-offs and probably a corresponding rise in criminal activity.

"Nevertheless, Bermuda has proven resilient when the going gets tough and we believe that we can turn things around. This takes leadership and tough decision making. The Alliance is poised to provide that leadership in 2010 and lead Bermuda to a better way."