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.