Economy

Technical recession was first in three years

  • Peaks and troughs: the island recorded two consecutive negative growth quarters for GDP at the end of 2017 and the beginning of 2018, the first technical recession since 2014. The most recent quarterly GDP peak coincided with the island’s hosting of the 2017 America’s Cup (Graph by Scott Neil)

Bermuda dipped into a technical recession in the first three months of last year, revised figures show.

The last time the island recorded two consecutive negative growth quarters — generally referred to as a technical recession — was 2014 when there were contractions of 4.2 per cent and 4 per cent in the second and third quarter.

The gross domestic product, which is a measure of the value of goods and services produced by Bermuda, for the second quarter was revised down to a 0.1 percentage contraction for the fourth quarter of 2017, and negative 1.6 per cent real GDP growth for the first quarter of 2018.

In figures released on Sunday, the GDP for the second quarter of 2018 showed Bermuda has since exited the recession with a 0.8 per cent rise in growth when adjusted for inflation; this period corresponds with the three months in 2017 that included the island’s hosting of the America’s Cup.

The year-on-year difference was helped mainly by a $14.3 million net surplus in goods and services, due primarily to a fall in the imports of goods. Imports have a downward effect on GDP growth.

Meanwhile, there was a 1.9 per cent increase in the export of services, particularly financial services, and a 2.8 per cent rise in goods exported.

From April to the end of June last year there was a $4.7 million, or 2.1 per cent, drop in investment into fixed assets. Driving this fall was a near 10 per cent decrease year-on-year in machinery, equipment and boats. However, the new airport terminal development and other projects produced a 6 per cent rise in the construction element of the gross capital formation segment.

Quarterly GDP figures are a lagging economic indicator, and are not set in stone. They can fluctuate over time as a result of revisions when new economic data comes to light.