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Bermuda Country Risk Report 2017

Bermuda Country Risk Report 2017

Core Views

Bermuda’s economy will grow relatively strongly over the next twoyears, driven by the tourism sector and government spending.

Nonetheless, longer term growth prospects will be undermined byrising public debt and a more nationalistic government, which willweaken investor interest.

We expect that Bermuda will experience moderate economic growthover the coming years, supported by the construction and tourismsectors. However, the island faces several notable risks to this forecast,including a crackdown on offshore financial centres such asBermuda in the wake of the ‘Panama Papers’ scandal, a slowdownin the US economy, a loss of preferred EU market access followingthe ‘Brexit’ vote and the re-opening of Cuba to US visitors.

Bermuda’s current account will remain in surplus over the courseof our 10-year forecast period, although the surplus will decreaseto 6.2% of GDP by 2024, down from 17.4% in 2014, in line withour projections for slowing exports of tourism services and seculardecline in off-shore finance.

Bermuda’s new Progressive Labour Party government is unlikelyto pursue any change to its status as a British Overseas Territory.

However, the country’s independence movement is likely to gainground over the coming quarters, which could weigh on investorinterest.

Major Forecast Changes

We have revised up our 2018 and 2019 growth forecasts on the backof likely fiscal expansion and an improved outlook for the tourismsector.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Fiscal Expansion And Tourism To Drive Growth In Short-Term
Bermuda's economy will grow relatively strongly over the next two years, driven by the tourism sector and government spending.
Nonetheless, longer term growth prospects will be undermined by rising public debt and a more nationalistic government, which will
weaken investor interest.
GDP By Expenditure Outlook
TABLE: 10-YEAR GDP FORECASTS
Structural Fiscal Position
Long-Term Economic Outlook
Recovery Ahead, But Only A Modest One
The economic nadir has passed in Bermuda, but the island's outlook remains clouded by sluggish growth prospects and a poor fiscal
position. Trend growth in financial services and tourism will remain below pre-crisis levels, dampening headline real GDP growth.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 2: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Independence Movement To Re-Emerge But Unlikely To Succeed
Bermuda's new Progressive Labour Party government is unlikely to pursue any change to its status as a British Overseas Territory.
However, the country's independence movement is likely to gain ground over the coming quarters, which could weigh on investor
interest.
Long-Term Political Outlook
A Stable Future
Bermuda will remain politically stable over the coming decade and continue to benefit from a strong, independent judiciary based
on the British legal system. Although party politics will remain largely divided along ethnic lines, this will not escalate into potentially
destabilising political violence.
Chapter 3: Demographic Outlook
Demographic Outlook
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
TABLE: POPULATION BY AGE GROUP
Chapter 4: BMI Global Macro Outlook
DM Growth Peaking, But EMs Have Room To Run
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: BERMUDA – MACROECONOMIC DATA & FORECASTS

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