Tourism Sector to Support Economic Growth in The Cayman Islands in 2023 And 2024

• Fitch forecasts real GDP growth of 2.4% in the Cayman Islands in 2023, from an estimated 4.0% in 2022.
• According to data from the Economic and Statistics Office, real GDP growth came in at 3.8% y-o-y in Q1 2022 (latest available data). While more up-to-date data is largely not available for the Cayman Islands, Fitch estimates that real GDP will have come in at 4.0% for the full-year 2022. 
• The economy of the Cayman Islands will continue to recover from the main impacts of the Covid-19 pandemic in 2023. The main growth driver will be the continued recovery of the tourism sector, which normally comprises around 35% of GDP, second behind only the financial services sector (55%) in terms of the market’s main industries.
• However, elevated inflation will weigh on real household incomes, denting consumer confidence and thus capping private consumption growth. Inflation came in at 5.9% y-o-y in Q4 2022. Although down from a recent peak of 12.1% y-o-y in Q2 2022, Fitch still forecasts inflation to average 4.0% in 2023. 
• Fitch then sees real GDP growth slowing further to 2.1% in 2024, owing to higher base effects and as the economy settles back towards its longer-term growth trajectory.
• Additionally, gains in the tourism sector will prove harder to come by, with capacity constraints in the sector emerging as arrivals trend closer towards pre-pandemic levels. 

(Source: Fitch Solutions)