Bermuda’s economy is now experiencing “real growth” after bouncing back from the Covid pandemic of the previous three years, according to the Government.

Further tax breaks could also be unveiled in the February Budget to combat the rising cost of living, according to Jason Hayward, the Minister of the Economy and Labour.

Mr Hayward made those claims after releasing economic performance figures for the second quarter of this year at a press conference yesterday.

According to Mr Hayward, the economy grew 2.3 per cent in the period after adjusting for inflation.

The figures also suggest a slowdown in the recovery. The economy grew 4.6 per cent in the first three months of the year.

Mr Hayward said that economic expansion was a direct result of increased household and government expenditure, along with business investment.

GDP increased 3.9 per cent during the second quarter, while consumer spending increased 3.6 per cent year-over-year to $809.1 million.

Wage growth is now outpacing the pre-pandemic figure, with employment income for the period up 3.9 per cent on 2022 levels. Pay increases were noted in international business, banking, business services and public administration.

Describing the trajectory of the economy over the past five years, Mr Hayward said that 2019 was a time of very positive economic performance, and in 2020 Bermuda was hit by the pandemic. The following two years were recovery years, and in 2023 ”what you see is the economy moving beyond pre-pandemic economic performance to real growth. That’s extremely positive.

“When our economy continues to improve, it gives us greater capacity to adjust some of the challenges that we’ll have with the cost of living.

“The Budget period that is coming up gives us an opportunity to look at the way we’re taxing Bermudians to see if there are further adjustments that can be made in our tax system to try to create a buffer for some of those high cost-of-living considerations that residents are having.”

Mr Hayward declined to provide details of any tax breaks in the pipeline, saying: “I can’t speak to that, but we have had consultations with the business community, and they have made their submissions to the Minister of Finance.

“It’s for finance and their team, along with the Cabinet, to determine what we believe is in the best interests of the country moving forward.”

The minister was also asked if time was running out for tax changes to be added into the Budget equation just two months before it will be presented to the country.

Mr Hayward replied: “We have a period of time in which we table the Budget, and we’re well within that particular time frame. We will have a Budget tabled next month.”

Mr Hayward said that while growth in the second quarter was less than in the first three months of the year, that did not mean the economic engine was running out of steam.

He said: “Normally when you have strong economic performance in the first quarter, the economy kind of resets itself, so I wouldn’t consider that to be a decline in growth.

“What we see is a quarter-by-quarter basis growth is measured and factored by different circumstances, so we could have strong growth in the second quarter of 2022, which means that the growth that you have in the second quarter of 2023 wouldn’t be as great as you experienced in the first quarter.”

Other statistics showed that consumption of services increased 5.1 per cent year-over-year, reflected in higher expenditure for air transport, catering services and personal care services. Spending on durable goods rose 5.4 per cent owing largely to increased expenditure on furniture, furnishings and new motorcycles.

Revenue from tourism was also up on last year, although visitor arrival numbers have yet to surpass pre-pandemic levels.

Estimated expenditure by air visitors increased to $110.8 million from $97.8 million recorded in the same period last year.

The Government also spent more money during the period, with expenditure increasing 3.5 per cent during the quarter. Wages, salaries and personnel training were the primary drivers for the increase.

Mr Hayward said that business investment grew 1 per cent to $212.1 million in the quarter. Investment in machinery and equipment increased 5.5 per cent owing to higher imports of special-purpose motor vehicles, radio navigational aid apparatus and medical equipment. Investment related to construction fell 3.2 per cent.

The island sold more than it bought, with the trade balance rising 0.1 per cent to $442.7 million as a result of growth in receipts for the export of goods and services by 2.7 per cent.

In the quarter, 173 new businesses were registered in Bermuda, bringing the complete business register to 16,226.

Asked how many of those new companies were in the international business sector, Mr Hayward said he did not have those figures to hand.

He added: “International business represents the largest portion of our economy, so growth in international business will be weighed heavier than growth in other sectors. That has been our reality for decades and will continue to be our reality until we get greater levels of diversification.

“The Government continues to facilitate the expansion and sustainability of Bermuda's economy by creating a business environment that allows businesses to thrive.

“The Government will continue to execute the strategic initiatives outlined in Bermuda’s Economic Development Strategy to ensure Bermuda experiences sustainable economic growth and development.”