Residents should be relieved but cautious following news that Bermuda is still operating at a healthy surplus in its trade with the rest of the world, economist Craig Simmons said.

The Bermuda College lecturer said that the second quarter of 2008 Balance of Payments statistics which were released at the weekend seem to fly against the negative commentary that has come to characterise discussions of the Island's economy.

The stats released on Sunday showed that Bermuda's current account was in surplus of $315 million for the second quarter of 2008, which ended June 30. This surplus marks a $30 million decline from the same period in 2007, however, the Island's trade surplus has improved significantly over the first quarter of this year when it was $118 million.

The year-on-year decline which was seen can likely be attributed in a large part to the decline in investment income due to the extreme losses on the world financial markets, Mr. Simmons said.

While, it's difficult to predict future performance, Mr. Simmons said investment income falls are likely to pull current account figures lowed for the rest of the year.

"I'd expect the quarterly numbers will continue to decline," he said.

What happens with employee compensation will be a key area to watch, he added. Income receipts from employee compensation — monies paid to residents by international companies — were actually up $25 million in the second quarter of 2008, but overall income payments into Bermuda were down as this figure was more than offset by a $69 million drop in investment income.

If we start to see employee compensation falling it will mean that jobs are being lost on the Island at a time when the money being spend by residents outside of Bermuda continues to grow as it is led by factors largely beyond the Island's control — fuel and transportation costs, the Island need to import most of its goods.