Growth In Bermuda To Slow As Post-Pandemic Recovery Loses Steam

• Fitch Solutions is maintaining its core view that growth in Bermuda will slow over the coming years after a stronger-than-expected post-pandemic rebound. Fitch forecasts real GDP growth of 2.3% in 2024 and 2.1% in 2025, down from a revised estimate of 4.3% growth in 2023.
• The tourism and international financial service sectors will remain key drivers of headline growth, though less favourable base effects, capacity constraints and slower growth in the US - the main source market for tourists - will pose headwinds over the coming quarters.
• Fitch expects domestic demand growth will moderate after recovering to pre-pandemic levels, with cost of living pressures likely to remain a drag on private consumption despite moderating inflation.
• On the fiscal front, government spending and public investment will make limited contributions to headline growth in 2024 as the government continues to prioritise fiscal consolidation in the short term.
• Risks to the growth forecasts are tilted to the downside; a renewed increase in commodity prices would drive up inflationary pressures in Bermuda and further weigh on consumption and investment activity.
• Further, a sharper-than-expected slowdown in the US would also likely lead to weaker growth in Bermuda due to its significance for the key tourism sector. More generally, Bermuda’s small size, narrow export base, and over-reliance on financial services and tourism leave it vulnerable to external shocks.

(Source: Fitch Solutions)