January 30, 2013 at 5:54 p.m.
Cox: Budget belt-tightening will ease effects of recession
This is the verdict of Premier Paula Cox who highlighted a new focus on retraining as critical to limiting job losses among Bermudians.
She said the new hospital project combined with new hotel developments, a Civil Service review and further ‘belt-tightening’ measures planned for the next budget would ease the effect of the recession. And she said the focus on allying training with job opportunities would help ensure Bermudians were prepared to take whatever job opportunities did become available.
Ms Cox said: “The Minister for Economy, Trade and Industry is also aggressively working with incentives to retrain and become certified to provide increased opportunities to Bermuda’s workers in a contracted labour market.”
Responding to concerns over an 8.1 per cent drop in Bermuda’s Gross Domestic Product, Ms Cox accepted that the island is particularly vulnerable to global impact on its core international business sector.
She said: “In particular, the 27.5 per cent decrease in output in the financial services industry was extraordinary, which highlights the vulnerability of Bermuda’s small open economy, as external shocks can have quite substantial effects on output as they are magnified around the economy.”
She said the 2009 recession was the worst to hit Bermuda since the 1930s.
But there are positive signs for the financial industry with new international regulation — like the Solvency II initiative — likely to have a positive impact on the insurance industry.
Ms Cox said: “The severity of the recession has impacted sharply on the financial position of Government and many companies in Bermuda and it is likely they can only return to profitability by increased productivity and flexibility of the labour force.
“Government is committed to continue to play its part during the economic recovery by using the fiscal tools at our disposal and will continue the existing payroll tax relief for the hotel and restaurant sector.
“We will continue to have challenges but if everyone is prepared to pull together, Bermuda would be well placed to take advantage of the eventual upturn in overseas economies.”
Ms Cox said Bermuda’s economy is still relatively strong with extremely high per capita income, sustained large current account surpluses in the balance of payments, strong institutions and a low public debt burden.
She said: “Our revised GDP per capita of $86,975 per person is still one of the highest in the world and the revised net debt to GDP ratio of 16.6 per cent is more than 40 per cent below the median for the Fitch rated ‘AA’ category median, which includes sovereigns rated ‘AA-’, ‘AA’ and ‘AA+’.”
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