We welcome the green shoots of an economic spring

Sometimes, in the spring, it’s hard to see the first green shoots of what will become the summer’s abundant growth. 

It’s like that with the economy.  You see a little uptick here, and another over there, but does that add up to a solid recovery from the awful beating the economy has taken over the past few years?

Anchor Investment Management, a prestigious financial services firm headquartered in Bermuda, has just released to its clients a report on the Bermuda economy, and they say this:

“After five years of economic contraction, we are starting to see some signs of a rebound.”

Whether that adds up to the beginning of a strong and sustainable economic recovery, they say, is less clear.  But they see green shoots, and I for one am encouraged by their analysis. I see those green shoots in my own business, Auto Solutions — car sales in our industry are up 35% in the first six months of this year, compared to last.  They show an increase in every month since January.

Some of those sales were to executives coming into Bermuda for the first time, which is again a positive sign. 

Anchor uses incoming container traffic as a measure of the strength of the local economy, and they see “meaningful improvement” there.  

I would comment that Anchor’s import figures have been taken just as the big hospital project came to a close.  Imagine what they might have been if the hospital project was still in full swing, and then add in the Princess and Pink Beach projects.

Anchor notes that “After nearly four years of declining nominal retail sales, the trend appears to be improving. 

“Consistent with our prior analysis, we believe the tourism sector has also bottomed. Air arrivals year-to-date from unofficial data rose 4.5% for a total of 19,251 air visitors through April (16,762 for 2013). Occupancy at hotels was up over 4% and revenue-per available room is up nearly 9% year-to-date. 

Expat exodus slowed

“In the international business sector, the current market conditions do not support significant growth for the Bermuda job market, although some jobs will be created in the expanding ILS industry…

“We expect to see consolidation within the traditional reinsurance market. Early indications are that new immigration and employment policies have attracted some jobs to the island and slowed the expat exodus, according to the latest employment figures.”

Anchor is worried by the decline in population confirmed by a recent Department of Statistics report. The loss of “thousands of expatriates and likely negative emigrations amongst some Bermudians” is threatening the Island’s remaining population with, among other things, a cost of healthcare and pensions that is unsustainable.   

The answer, Anchor says, is less emigration and more immigration.  They say “This will only be accomplished through improved employment options locally and a strengthening economy which provides increased job opportunities. One aspect that would attract investment and hopefully make immigration to Bermuda by future entrepreneurs and businesses more palatable would be an open and transparent immigration policy that has a path to citizenship. Otherwise Bermuda could risk remaining a transitory nation subject to the whims of the global economy.”

That seems to be a lesson many of us don’t seem to have learned, despite hearing it over and over again from a variety of people, including experts like Anchor.

But let’s focus on the good news. Anchor says they estimate that Bermuda’s real GDP fell 1.5% to $4.75 billion in 2013 from $4.82 billion in 2012, and that since 2008 the Bermuda economy has shrunk 15.8% from $5.65 billion. 

But, and this is a big but, “We forecast that the economy bottomed in the second half of 2013 and real GDP will grow 0.6% in 2014 and 0.5% in 2015…”

So we’re on the right track, and my colleagues and I are going to do our best to keep it that way, doing what we can to restore confidence and grow the economy. The work is urgent and vital because the recovery is not happening fast enough for people who struggle each day. We know we have a long way to go, but things are slowly looking up, Mr and Mrs Bermuda. 

Glen Smith is One Bermuda Alliance MP for Devonshire North West

Editor’s note: The Sun reported extensively on Anchor’s findings in Wednesday’s edition.