Premier and Finance Minister the Honourable David Burt today presented the 2023 / 2024 fiscal budget in the House of Assembly, TNN will provide insert of the Budget Statement.
Mr Speaker, Bermuda stands at more than the dawn of a new fiscal year. No society has been immune to the socioeconomic impacts of the pandemic, foreign wars, inflation, and disruptions in supply chains. These are the realities of life today, and culturally, though
we may have shed ourselves of our masks, the freedom of that change and the return to normality that it should have represented has been short-lived.
Our growth aspirations and the promise of renewal have been somewhat frustrated by these lingering trials, but even in the midst of such unprecedented challenges, Bermuda…this jewel of the Atlantic….has demonstrated a determination to defy the odds.
Mr Speaker, amidst the very real hardships that our people are experiencing, there is cause for hope. This Budget will use the mechanism of public financing to harness that hope by
investing in people, advancing critical infrastructure projects, and continuing the work of change demanded of this Government by our successive and historic election victories.
Mr Speaker, the Bermuda Progressive Labour Party in Government has always been about the politics of hope. It is a mantra set out by the first PLP Premier, Dame Jennifer Smith, and has been the guide for all those who would offer themselves for public service under
our banner.
In a 1997 speech to the then International Companies Division of the Bermuda Chamber of Commerce, Dame Jennifer said this:
“A Progressive Labour Party Government will create a Bermuda in which the gov-
ernment will not only serve the people, but we will rekindle hope – heal its present divisions – and replace apathy and alienation with vigour and a feeling of oneness and unity.
We will work steadfastly to create a Bermuda in which one can grow up healthy – enjoy old age – and live to see children and children’s children do better than they did. We will work for justice in the workplace. We will work for a more peaceful and peaceable community, so we can once again feel safe on our streets and in our homes.”
Mr Speaker, that call to action, that vision applies equally today as it did 26 years ago when Dame Jennifer said it. This 2023/24 Budget addresses the complexities of the 21st century’s
changed demands while staying true to the core ideals that the people of Bermuda have endorsed in five of the past six General Elections.
Global Economic Review
Mr Speaker, the year 2022 was one of many challenges. Geopolitical conflict, inflation, a food supply crisis, supply chain bottlenecks, and the lingering effects of the COVID-19 pandemic have caused shockwaves across the global economy.
Mr Speaker, the International Monetary Fund estimates that the global economy will grow by 3.4% in 2022, slow to 2.9% in 2023, and then rise to 3.1% in 2024. Growth in advanced economies is expected to decline sharply from 2.7% in 2022 to 1.2% in 2023 before rising
to 1.4% in 2024. The United States’ growth is projected to fall from 2.0% in 2022 to 1.4% in 2023 and 1.0% in 2024. On the other hand, growth in emerging markets and developing economies is projected to rise modestly, from 3.9% in 2022 to 4.0% in 2023 and 4.2% in
2024.
Global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024.
Mr Speaker, in addition to projections of slowing economic growth and lower inflation for 2023, it is generally expected that there will be higher global interest rates and tightened monetary conditions. Favourable scenarios include a boost in spending from pent-up demand and faster disinflation. Overall, inflation is expected to continue on a downward trend as international fuel and
non-fuel commodity prices decline due to weaker global demand. The tightening of monetary policy is expected to continue putting downward pressure on core inflation. An easing in advanced economies’ labour markets is expected to moderate wage inflation. As consumer preferences revert to services, prices of goods are expected to fall.
Mr Speaker, the pandemic has created an environment of higher debt levels, lower growth and higher borrowing costs, placing many emerging and developing economies at a high risk of debt distress. This exacerbates the vulnerability of these economies as global interest
rates continue to increase. Further, an escalation of geopolitical tensions could lead to disruptions in the global supply chain, resulting in upward pressures on the prices of goods such as energy and food and the possibility of tighter monetary conditions. Navigating
2023 requires the prioritisation of actions to reduce inflation, contain the reemergence of COVID-19, ensure financial stability, restore debt sustainability, address supply chain
constraints and strengthen multilateral cooperation.
Local Economy Highlights
Mr Speaker, I will now focus on the domestic economy. Bermuda’s gross domestic product (GDP), the primary indicator for economic growth, is estimated to have grown between
3.4–3.9% in 2022. In 2022, Bermuda saw signs of economic growth supported by a rebound in quarterly GDP data in the first half of the year. Positive economic performance was fuelled by new international business registrations, visitor spending, higher employment income, greater levels of household consumption and increased construction activity, indicating a continued trajectory of economic recovery.
Mr Speaker, Bermuda continues to see growth in international business. 2022 saw 812 new company incorporations and a 5.2% increase in jobs with 230 new jobs being filled. I am happy to report that, for the second consecutive year, the majority of the new posts were filled by Bermudians rather than guest workers, proving that the balanced policies
of the Bermuda Progressive Labour Party Government create the catalyst for growth in international business and ensure Bermudians benefit from that growth. This sector now provides 4,642 jobs within our economy and is the single largest economic activity group.
Mr Speaker, with the continued easing of border restrictions, the travel industry globally showed signs of a rebound in 2022, and Bermuda’s tourism sector reflected that, as demonstrated by a significant improvement in air visitor and cruise visitor spending. We
saw an increase in employment levels by 6.3%, bringing the total number of jobs in the accommodation and food services sector to 3,629.
Mr Speaker, the construction industry in 2022 showed a decline in both building permits and planning applications. However, during the first three quarters, the value of new projects started grew from $83.4 million in 2021 to $100.6 million, an increase of 20.6%.
This figure for the first three quarters of 2022 surpasses the last three years’ annual totals and is above the pre-pandemic levels of 2019. This signifies a strong recovery within the sector, which also saw jobs increase by 1% in 2022.
Mr Speaker, despite the increasing inflationary pressures experienced throughout 2022, Bermuda’s overall rate of inflation remains relatively low compared to advanced economies, as reflected in the Consumer Price Index, which indicates an annual inflation
rate of 3.8% for November 2022. The overall rate notwithstanding, food price inflation is still registering at 10.4%. However, the current trend of inflation indicates that it has peaked and is beginning to abate.
Mr Speaker, Bermuda’s balance of payments continues to record relatively large current account surpluses, which are an important strength in the Bermudian economy. Bermuda’s
total current account surplus over the first three quarters of 2022 was recorded at $926 million. This figure is 25.8% more than the $736 million recorded over the first three quarters of 2021.
Mr Speaker, sustainable economic growth cannot be achieved without an expansion of jobs within our economy and a reduction in unemployment levels. In 2022, the total number of jobs filled in Bermuda increased by 402 posts or 1.3% from 31,316 in 2021 to 31,718.
This rebound in employment levels in the Bermudian economy comes as a result of the robust growth in the international business sector, our recovering tourism sector and the
professional, scientific, and technical sector, which collectively represented 76.1% of the total new jobs filled in 2022. For the second consecutive year, Mr Speaker, the job positions in public administration have declined. The number of jobs filled went from 4,008 in 2021 to 3,883 in 2022, recording a decrease of 3.1% or 125 jobs.
Mr Speaker, strong growth was observed in employment income for the first three quarters of 2022. It is estimated to have increased by 6.6% or $180.6 million when compared with the same period in 2021. This increase was driven by the international business sector,
which saw an increase of $94.3 million or 8.9%.
Mr Speaker, despite the uptick in inflation, both personal consumption and the retail sector showed signs of growth in 2022. Household personal consumption for the first three
quarters of 2022 was estimated to be $2.97 billion, reflecting an increase of 17.5% or $441.7 million over 2021. Total gross turnover in the retail sector stood at $990.6 million, which represents a 3.1% increase when comparing the first ten months of 2022 against 2021.
Mr Speaker, the positive growth across many major economic indicators signals a reversal of the downward trends experienced during the midst of the pandemic, with many indicators
now nearing pre-pandemic levels. The growth of employment levels in our key sectors is evidence of increasing confidence in our economy. Inflation is downward trending and tourism is on a trajectory to reach pre-pandemic levels. However, we face several external
risks: higher global interest rates, supply chain disruptions, geopolitical tensions, and the impact of climate change and its correlation with our insurance industry. We must therefore remain focused on creating sustainable growth through economic diversification and the
strengthening of our core sectors such as international business.
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