GEORGE TOWN, Cayman Islands — The premier and minister for finance, tourism and development of the Cayman Islands, McKeeva Bush, has welcomed the latest comprehensive report on the territory’s economy: The Cayman Islands’ Annual Economic Report 2010, which covers the 2010 calendar year.
Bush noted that, while the economy contracted in 2010, "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".
Economic activity in 2010 declined as gross domestic product (GDP) at constant prices fell at an estimated rate of 4.0 percent as compared to a decline of 7.0 percent in 2009. The major sources of decline in production came from the construction, real estate and financial services industry. Consequently, real GDP per capita declined to $42,605 in 2010 from $43,363 in 2009.
The financial services industry exhibited a mixed performance in 2010, as new company registrations and new partnerships rebounded. In contrast, downturns were recorded in mutual funds registration, stock exchange listings, insurance licences and bank and trust licences.
The premier cited the tourism sector’s performance 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," he noted.
Construction declined in 2010, as indicated by the value of building permits in Grand Cayman — which slid 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, due mainly to the fall of the housing price index, which offset the strong growth of 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. The unemployment rate rose to 6.7 percent compared to 6.0 percent in the fall of 2009.
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.