keep Bermuda's fragile recovery on track.

The Hon. David Saul believed the Island had endured the worst of the recession.

Economic revival had been propelled by a visitor arrivals' surge in April and May, he said.

And tourists at "resort hotels'' had shot up in April by 35 percent -- to the highest number since 1987.

Low inflation and a flourishing international business sector had also helped.

But Dr. Saul warned the recovery was fragile and all companies may not bounce back to full health before 1994.

He also admitted shopkeepers were still reeling from the recession.

Dr. Saul went on to call for a massive Island-wide effort to keep up the revival's momentum.

"It is extremely important that the relatively modest level of recent pay awards continues and that Bermudian businesses refrain from taking advantage of the gradually improving economic and financial conditions to raise their prices to improve their margins, if we are to become even more competitive.'' Dr. Saul delivered his statement on the economy to the House of Assembly yesterday.

It was based on Bermuda's statistical bulletin for the first quarter of 1993.

And it was a speech mixing high hope with caution -- in equal doses.

With the improved tourism picture for April and May there was clear evidence that the economy is climbing out of the recession, he said.

"However, that optimism must be tempered with realism for, as in the United States, the recovery remains patchy and fragile.

"In addition, the point needs to be stressed that a recession is not like a light switch; it cannot be turned off and on in an instant.

"Hence the recovery from the recession will indeed take time, but the fact remains, overall indicators are now moving in the right direction.'' Dr. Saul told MPs air arrivals in the first three months of this year ended 3.4 percent up on 1992.

But with the cruise ship season starting later this year the overall tally of tourists dipped by 0.5 percent to 48,787.

There had, however, been a sharp rebound in arrivals in April and May.

This had bumped up air arrivals, January 1-June 6, to 149,960 -- an 11.7 percent rise on last year.

"A similar picture emerges with the cruise ships. From a slow start in April the increased capacity of the two new ships has had an impact on the number of cruise passengers.'' Visitor arrivals for the calendar year to June 6 are up by 12.2 percent to 188,811.

Dr. Saul said the tourism industry's health also hinged on where and how long visitors stayed, and how much they spent.

For the first three months there was a 4.6 percent increase over 1992 in tourists staying in "commercial accommodation''.

"This trend had continued in April, the latest month for which statistics are available.'' Dr. Saul added: "The number of visitors staying at the resort hotels in April increased by 35 percent and these resort hotels experienced their best April since 1987.'' These hotels also sold 112,409 bednights in April -- a 25.6 percent growth.

"While this was the best April performance since 1990 it does not mark the return to the better days of 1980s and reflects the fact that the average length of stay remains below the historic norm.'' The length of stay at Bermuda Hotel Association properties mirrored that for 1992 in the first three months.

In April it improved to 4.5 days from 4.2 days in 1992 -- compared with an average of about 5 days in the 1980s.

Dr. Saul said the amount visitors were spending also differed little from 1992.

"These expenditure statistics are not unexpected. The recession has taught everyone to pay greater attention to their expenditure.'' "The onus is on all Bermudians employed in the hospitality field, in its broadest sense, to ensure that they give quality service and value for money to encourage our guests to spend more.'' On the international business front, Dr. Saul said the number of firms continued to grow.

At the end of March there were 7,333 companies registered -- 164, or 2.3 percent, more than last year.

This trend had continued in the past two months with 174 new businesses incorporated, compared with 109 in April and May 1992.

Dr. Saul admitted job opportunities in the construction industry remained low.

But there was a 6 percent rise to $12.1 million in the value of construction work put in place.

And a 30.6 percent increase to $4.7 million in the value of new projects.

Dr. Saul said inflation had remained steady at 2.7 percent in April.

"This confirms the view that there is little underlying domestic inflationary pressure at present.

"Of further note is the fact that Bermuda's rate of inflation continues to remain below that of the United States, thereby improving our competitive position.'' On a gloomier note, Dr. Saul said shopkeepers were still reeling from the recession.

Sales remained poor in the first three months of this year, and compared with 1992 the value had dipped by 1.9 percent.

But this was not totally unexpected.

Shoppers were loathe to dip into their pockets following the pre-Christmas boom.

April, however, saw a resurgence with value of sales rising by 4 percent over last year.

The volume, too, went up by 1.3 percent, with a resurgence in car sales.

"I hope the improved tourism climate will also boost local confidence and thereby stimulate growth in domestic expenditure in order that our depressed retail sector can now begin the long road to recovery.'' Switching to overseas buying, Dr. Saul said goods worth $4.4 million were declared at the airport in the first quarter this year.

This was a 14 percent rise on 1992, partially reflecting more accurate declarations of goods.

Over this period, the average value of goods bought abroad by each person was $207, compared to $196 in 1992.

On a more upbeat note, Dr. Saul went on to hail the $11 million surplus on the current account of the balance of payments for 1992.

"This compares with a surplus of $8 million in 1991 and is a far cry from the situation prevailing during the late 1980s which peaked at a deficit of $52 million in 1989.'' Dr. Saul said Bermuda had weathered the recession well compared with other economies.

And he said Government should take credit for its foresight in tackling the recession.

"It must also be recognised that local businesses have also played a very positive role in guiding the Country through the recession.'' He added: "There is now clear evidence that Bermuda is emerging from the recession, though it will now take time for the improvement to be experienced in all areas.

"The recovery is still fragile and it may not be before next year that all companies will have restored their financial positions to a healthy state.

"It is essential that we all continue to work together in order that the recovery continues to gather pace and we can all begin to enjoy a demonstrable improvement in our standard of living.

"Clearly, Mr. Speaker, we have weathered the worst of the recession, and barring any unforeseen problems the overall economy is now on the mend.''