TUESDAY, DEC. 18: Fitch Ratings said the OBA has a pressing need “to address high unemployment, a continuing recession, large fiscal deficits, and mounting public debt levels.”

Last night the One Bermuda Alliance defeated the Progressive Labour Party 19 seats to 17.

Fitch said the ousting of the PLP “opening the door for a reassessment of economic policy” based on its platform on economic growth and job creation.

Fitch added: “The new government will face a significant challenge in paving the way for a resumption of growth after three years in which the economy contracted as a result of both cyclical and structural factors. Bermuda suffers from a lack of economic diversification, weak growth prospects, and limited policy flexibility.

“Key mature sectors, including tourism, financial and reinsurance services face increasing competition from other countries and are exposed to swings in global economic conditions.

“After contracting by 2.8 per cent in 2011, Fitch expects Bermuda's GDP to shrink again in 2012 and to remain essentially flat in 2013.”

Fitch stressed the preservation of jobs in the international business sector as a key for the Bermudian economy in the coming years.

“Activity in the sector has continued to fall for four consecutive years (down 8.3% in 2011) as a result of low investment returns, high catastrophe claims, weak performance in business lines, and competition from other jurisdictions.

“Headcount is likely to fall again in 2013, though at a slower rate.”

Fitch said also highly important was the Government being able to attract foreign investment for new hotels and the redevelopment of the waterfronts in St George and Hamilton, which would help spark a revival in the tourist sector.

Fitch said that could largely hinge in lowering labour and electricity costs.

The ratings company added: “At the same time, the incoming government has announced initiatives to support local business owners and entrepreneurs.

OBA's platform includes a tight control on public spending and a reduction in public debt. The new governing party has identified several sources of potential public spending cuts to reduce public deficits, including a possible government headcount freeze, the elimination of consulting contracts, a 10 per cent pay cut for government ministers, and closer monitoring of all public expenditures.

“No planned reductions in social services spending have been included in the OBA platform.

“As we noted in June, when Bermuda's long-term Issuer Default Rating (IDR) was downgraded to 'AA', we will remain focused on the government's commitment to a credible fiscal consolidation plan and steps to restore economic growth in assessing the sovereign's credit profile.

“A failure of the new government to deliver on either of these priorities could lead to further negative rating actions. Alternatively, resumption of economic growth and concrete signs of fiscal consolidation and debt stabilisation would sustain Bermuda's ratings.”