Cayman GDP fell 4% in 2010

| 06/07/2011

(CNS): The latest figures from the Economics and Statistics Office have revealed that the islands' real GDP fell in 2010 by four percent to $42,605 from $43,363 in 2009. According to the Cayman Islands Annual Economic Report 2010, the major sources of decline in production came from the construction, real estate and financial services industries. Commenting on the results, the finance minister, Premier McKeeva Bush, stated that, while the economy may have contracted last year, forecasts suggest that the economy will improve throughout this financial year, with further growth expected thereafter. He said it was because of the state of the local economy that his government was pursuing a number of private sector projects.

“Based on the forecasts made for the local economy along with the prediction of modest worldwide growth, and coupled with the supportive actions of the Government for private sector projects in the Cayman Islands, there is the bright and encouraging likelihood of growth within the Islands’ economy for the 2011 calendar year and beyond that to the government’s fiscal years that will end on 30th June 2012, 2013 and 2014,” Bush said.

“It is precisely for the noble reason of improving the state of the local economy that the Government is encouraging the advancement of projects, particularly in the private sector – as public sector projects must remain restrained by responsible and prudent fiscal management considerations,” the premier added as he commented on both the annual report and the Compendium of Statistics, which was also released this week by the ESO.

The annual report suggests that the GDP growth projection for 2011 is placed at 0.9 percent, arising primarily from an expectation of a strong recovery in tourism along with a robust performance expected from the financial services industry. Inflation rate in 2011 is expected at 1.9 percent as sharp adjustments in international food and oil prices are foreseen.

Bush pointed to the tourism sector’s performance as revealed inthe report and described it as robust.

“Tourism rebounded with a growth of 5.2 percent, with both air arrivals and cruise arrivals up by 6.0 percent and by 5.1 percent respectively to bring the total visitor arrivals to 1.89 million in 2010,” Bush added.

Meanwhile, the performance of the financial services industry in 2010 was mixed. New company registrations and new partnerships rebounded but downturns were recorded in mutual funds registration, stock exchange listings, insurance licences and bank and trust licences. 

Construction declined in 2010 with the value of building permits in Grand Cayman sliding by 42.1 percent compared to a year ago.  The value of planning approvals also fell by 23.9 percent to reach $330.5 million.  Real estate activity contracted as the number of properties transferred fell by 21.9 percent to 1,787 – which were valued at $316.4 million. 

Domestic credit from commercial banks expanded by $171.3 million as public sector financing from the local banking sector increased by 16.8 percent while credit to the private sector increased by 5.0 percent.

The average inflation rate in 2010 was very modest at 0.3 percent this was down to the fall of the housing price index which offset the strong rise in food and electricity price indices.

In the fall of 2010, the total labour force was estimated at 35,859, which was 0.7 percent lower than a year ago and unemployment rose to a high of 6.7 percent compared to 6 percent the year before.

According tot he figures in the ESO’s c Compendium of Statistics 2010 which was also published this week the  challenges arising from the performance of the economy in the 2010 calendar year impacted the demand for social services.

A total of 7,859 persons were assisted by the Department of Children and Family Services in 2010, or an increase of 19 percent over 2009.  There were 631 new cases of persons seeking assistance in 2010 when compared to 454 persons the previous year.

The restructuring of the central government also continued in 2010, with the total number of filled posts declining to 3,618 in 2010. This represents a reduction of 76 posts when compared to 2009, which is in-keeping, officials said, with government’s objective to improve its fiscal results and return the country to sustained surplus results.

Almost all Ministries, Portfolios and Departments saw a reduction in the number of posts filled. The largest reduction, 48 posts, was recorded by the Ministry of District Administration, Works, Land and Agriculture. At the end of 2010, the largest Government agency was the Ministry of Education, Training and Employment with 844 employees followed by the Portfolio of Internal and External Affairs – with 839 employees, covering the uniformed agencies such as Police, Immigration and Prison.

Despite the economic challenges the country faces, the premier said some sectors continued to advance as he pointed to the enrolment in reception to secondary government schools, which showed an increase of 3.2 percent over the 4,712 students enrolled in 2009. This occurred despite a cut in the schools’ recurrent expenditures by 11.6 percent.

Enrolment in the Bachelors degree programme at the University College of the Cayman Islands also showed a noticeable increase, moving from 91 students in 2009 to 130 students in 2010, a 43 percent increase.

The public health sector’s capacity remained unaffected:  with outpatient, casualty and district clinic visits recorded at 149,429 in 2010. This is only marginally less that the 150,157 visits in 2009. Discharges from Government’s George Town Hospital remained almost unchanged at 5,233 when compared to the 2009 year while the Faith Hospital on Cayman Brac discharged 436 patients for an increase of 21 percent over the level for 2009.

For more information on the two reports go to  www.eso.ky    

Category: Local News

Comments (26)

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  1. tim ridley says:

    The Government would serve the Islands best if it got out of the way of the private sector and went back to doing what governments are supposed to do. That also means that the private sector must stop lobbying for projects paid for by Government. Some of the worst offenders in Cayman are in the private sector who both shout for a reduction in Government expenditure and also lobby for expensive infrastructure projects that the "taxpayer" must fund; and out of which those same elements of the private sector will profit. I

    Those who really believe in small government and a thriving private sector should be true to the cause!

  2. Dreadlock Holmes says:

    Seems to me the plan was once Cayman: Became a world financial centre with banks, hedge funds, etc.:

    Most Caymanians would work (?) for government or government agencies.

    With all the perks (free pension and health care) involved.

    Most work would be done by imported labor

    Via work permits controlled by government and local business.

    Those policies ensured previous governments would be elected. And they were. Year after year.

    As long as government kept increasing it's work force (to unsustainable levels) everything would be hunky dory.

    The fact is: Government can not afford itself any longer. 

    A policy based on me first because "I know so and so", and one that divides a society for political expendience never does.

    The fact is: Government can not afford itself and all it's hangers-on. 

  3. The lone Haranguer says:

    7,859 !!!!!!!!!!!!! What ! a 19% increase !! It must be a scam, you mean half of the Caymanians work for the goverment or one of the goverment controlled authorities and the other half is on the dole, we have a damm welfare state.

    This cannot go on it will destroy the country, the freeloaders will keep demanding more and more from the private sector until it does not make sense to run businesses here and when the productive people leave they will be no one else to suck of off. The country will degenerate into anarchy.

    These young criminals that are doing the bandit work have probally never seen they mothers and baby fathers do an honest days work in thier lives so they believe they should go thru life as hustlers.

    Caymanians used to be a hard working people, we have become fat and soft, we cannot even turn off that damm A/C, we go down and get goverment assistance to pay our power bill. Disgusting no pride thank God my fathers is dead and does not have to watch this shamefull behaviour of his people.

  4. Ken P says:

    Simply put get rid of the stupid rollover policy, lower work permit and business fees, create New Business Zones, encourage small businesses startups, build 2-3 4 & 5star 200-300 room hotels, a tourism college to attract international students, get a highly skilled educated workforce and importantly lower crime. Potentially that could be an additional $250 million to our economy annually.

  5. Anonymous says:

    This is caused by increasing taxes, over-spending, failure to get infrastructure projects going, broadcasting to the world that the country was broke, and a general lack of economic intelligence by the UDP Govvernment.

    • truth says:

      Which also means there is no hope for the future of Cayman as nothing will change in Government but the names.

    • T.L. Haranguer says:

      This was caused because the DNNIBSFMC (do nothing no ideas big spending fear mongering crowd) that preceded the UDP depleated the treasury and did not start any projects that would generate monies in the ecconomy.

       

      Infastructure projects only generate monies while the building is going on what McKeeva wants to do is way better. His projects will generate immediate monies durring the building out proccess but then will generate a constant flow of monies into the future at no cost to us.

       

      Win Win Win my friend.

       

      It is real easy to spend money it is way more difficult to make it.

       

      You know I think the guys in the PPM are well meaning, but at this time we need talent. I am supporting UDP policies for now.

      • Anonymous says:

        Yes, we do need talent but clearly the UDP Govt. does not have it.

        • They have stumbled from one fiasco to the next.
        •  
        • There is no sense of direction or plan. They say they want to promote tourism, e.g. Shetty Hospital, and yet promote projects such as oil refineries and mega quarries/cargo port that will destroy dive sites and generally create environmental havoc that tourists definitely do not want.
        •  
        • When the FCO required them to reduce spending by 6% they have instead increased it by $10 million.
        •  
        • Their budget projections are notoriously and rapidly swing from budget surpluses to budget deficits of $55m+
        •  
        • They have wasted money on unnecessary projects such as the Brac Hurricane Hilton and paving private car parks XXXXX. 
        •  
        • They violate CTC procedures to choose Cohen & Co. , find they cannot deliver but still have to pay them and have to return to the bank that won the bid at greater cost than they originally offered.  
        •  
        • They have increased taxes and closed down businesses driving the economy into the pit
        •  
        • They terminated the schools contracts with TJI and which will cost the Govt. millions of dollars    
        •  
        • They have splurged on junkets for themselves while telling everyone else that they need to tighten their belts.
        •  
        • They have not collected millions of dollars from big time developers like Mike Ryan XXXX.
        •  
        • XXXXX

        In short the UDP Govt. has been a disaster and you have the nerve to speak of "talent"!

        • The Lone Haranguer says:

          I checked your list twice hoping to find a suggestion for a project that is self financing and that will make money for the country, but I did not see any. Your must be a PPM supporter. (DNNIBSFMC)

  6. Anonymous says:

    With the rollover remaining in place, there is only one direction for GDP to go – down.

    • Ex-expat gone home already says:

      Actually it is more accurate to say that it will keep going to other locations where expat professionals are welcome on the long term and don't need to fear crime quite so much.  For example my former million-dollar-a-year contribution to the Cayman Economy is doing quite well as a new million-dollar-a-year contribution to my homeland.  

      Your beaches were nice and your Caymanian people generally kind and thank you for letting me come visit, but those others (any you know of whom I speak) have destroyed your island with crime, and the government policies saying I ought not plan to stay, well… the beaches aren't that nice.

      Good luck (really), and I hope this turns around for you.

  7. Anonymous says:

    "The latest figures from the Economics and Statistics Office have revealed that the islands' real GDP fell in 2010 by four percent to $42,605 from $43,363 in 2009".

    CNS, I am afraid that your opening statement has conflated two separate statistics. While the report does state that GDP fell at an estimated rate of 4.0 percent from 2009, the figure of  $42,605 from $43,363 in 2009 represents the 1.8% decrease in per capita income which although was precipated by the decline in real GDP.

  8. Anonymous says:

    Even more shocking is the fact that Cayman's per capita GDP is down over 11% since it peaked at CI$42,899 in 2007. Read the ESO Annual Economic report for 2009 to confirm this.

    • Anonymous says:

      GDP per capita down?? Did the money launderers get rolled-over too? At least this might help our image when it comes to money laundering investigations as one of our opponent's arguments was that due to the high GDP there had to be money laundering going on.

       

      The UDP Govt fixed them though, UDP imported poverty via the mass status grants and you hardly hear anything from OECD n dem anymore – way to go Mac!!

  9. Anonymous says:

    Tell Bush to blame that on PPM too.  Whatever happened to the UDP's turning around of the economy in 90 days?  The fluff the UDP offers to Cayman is like a straw to a drowning man.  It's no use. 

  10. Real World says:

    All Bush has to offer the country is a wing and a prayer.  His economic policies [chasing all over the world to try to find a couple of rich inward investors to slide a few Dollars (and Yen) over XXXX the table have worsened Cayman's overall economic position over the last two years.  He had done absolutely nothing to stimulate the LOCAL economy.  In fact, he's trashed it by raising taxes during a recession, to put a few dollars directly into the government's coffers.  It is also arguable that his poor handling of the economy (his own portfolio) has increased the divide between rich and poor in Cayman and may be a factor in the increase in armed robbery on the island.  If Bush really had the country's best interests at heart he would have the courage to admit that he lacks the classsic education and management skills to bring Cayman out of the current economic crisis.

  11. truth says:

    In other words Whatever he says is the one thing that will not happen. Bush is so far over his head he now has to take a month off (double payed of course) to figure out how to get himself out of this mess much less how to get the island out of its mess.

  12. Anonymous says:

    Thats not true and u miss spelt it that should read UDP and you missed a figure that should read 94% the other 6% are the very small amount of free loaders left.

  13. Anonymous says:

    Great! Time for a well deserved 1 month vacation

  14. Anonymous says:

    This pains me to admit more than it pains you all to read… but I think it may be down because I left and I no longer spend all my wages on shoes, cocktails and spa days at the Ritz.  Sorry Cayman!

  15. Anonymous says:

    truly shocking figures and proves mckeeva knows nothing about basic economics….

     

    thats what happens when you try and tax yourself out of a recession…thank you udp!

    • Anonymous says:

      The other side will say “Truly shocking what a real mess PPM left the country in!!!”…..this PPM/UDP nonsense has to stop. It is boring, childish, silly and not moving our country forward,

      Until ALL Caymanians start to pull together, stop tearing each other down and look out for one another we will get nowhere. It truly is time for the Independents.

      • Real World says:

        Dismantling the two party system of politics is the only thing that would provide for one governing body to lead this country out of recession.  The fact is, the MLAs in Cayman are simply not mature enough to be anything other than sniping and combative.  Let's be honest, we all know what Cayman's like. A lot of the childishness we see in the LA is a West Bay v's North Side rivalry thing! 

  16. Anonymous says:

    Hi CNS,

    The below wording need to be changed.

    "The latest figures from the Economics and Statistics Office have revealed that the islands' real GDP fell in 2010 by four percent to $42,605 from $43,363 in 2009. I believe the number shown are income per capita figure and which fell 1.8%

  17. Anonymous says:

    There you go.  I'm guessing everyone in the  Economis and Statistics Office will be without a job before the week ends.