Performance Review

Preliminary data for the first three quarters of 2009 indicates that merchandise imports fell by 18.0 per cent from the comparative period a year ago to $534.4 million. This decline was anticipated in light of the projected downturn in domestic demand.
In absolute terms, merchandise imports fell by $117.7 million, mainly due to reductions in building materials, transport and transport-related items, tobacco and alcohol and manufactured products.
Since September 2005, the volume of imported cargo declined consistently. As at September 2009, the tonnage of cargo imports declined by 15.3 per cent compared to the similar period of 2008. It may be noted that the slowdown in the construction sector precipitated declines in imports of cement, aggregates and other building materials by 28.8 per cent, 53.3 per cent and 46.0 per cent.
The total quantity of fuel imported increased by 15.3 per cent during the review period despite the depressed economic condition. Diesel imports, which account for 71.7 per cent of total fuel, rose by 16.6 per cent, while gas and aviation fuel grew by 16.0 per cent and 15.5 per cent. These increases may be partly explained by the general downtrend in oil prices, which boosted domestic demand. However, propane gas imports declined by 28.9 per cent during the period.
Demand for foreign labour slid further as weakening economic conditions hit employers.
The measure of foreign employment in the private sector, total work permits issued by the Immigration Department, recorded a 9.5 per cent decrease as it fell to 23,626 in 2009. This is the steepest decline in the recent past and represents the shedding of 2,488 jobs since a year ago.
Total net domestic credit granted by the commercial banking sector grew by 20.5 per cent to reach $3,027.2 million as at September 2009. Domestic credit to public and private sectors increased by 48.8 per cent ($132.0 million) and 17.1 per cent ($382.7 million) respectively. The robust increase in credit is influenced partly by the increase domestic borrowing by Central Government as well as the increase demand for credit generally, as a result of lower lending rates.
Loans allocated to households – which accounted for 64.0 per cent of total private sector credit – rose by 3.4 per cent (or $55.3 million) as at September 2009 compared to a year ago. Credit for domestic property accounted for majority of household lending; however, loan increases were dominated by consolidated debt and other miscellaneous debts.
Lending to the business sector – which accounted for 36.0 per cent of total private sector credit – grew by 52.9 per cent over the review period. Expansions were recorded for all sectors except recreational, personal and community service.
The lackluster global economic recovery is reflected in mixed performances of the financial services sector as at September 2009. With the exception of insurance companies, fewer registrations were recorded for mutual funds, trust companies, bank and trust licences and new companies.
The worldwide consolidation in the banking sector continued to impact Cayman as the total number` of bank and trust companies licensed contracted to 270 as at September 2009, a 3.2 per cent decline from the September 2008 figure. Similarly, licences to trust companies decreased by 2.1 per cent to reach 138.
The Cayman Islands insurance business grew slightly as the total number of insurance licences increased by 6 (or 0.8 per cent) − from 800 in September 2008, to 806 as at September 2009.
Activity within the mutual funds industry weakened during the review period as total mutual funds dropped to 9,838 as at September 2009, a 4.4 per cent (or 453) adjustment since September 2008. Nonetheless, the third quarter figure represents an improvement over the second quarter of 2009.
During the period January to September 2009, total new company registrations reached 5,840 as compared to 9,600 over the same period of 2008, representing a 39.2 per cent decline. This decrease was on account of reductions across all categories. In particular, exempt companies that account for a majority of the registrations fell by 41.1 per cent.
The global economic recession continued to impact tourism arrivals in the Cayman Islands during the first three quarters of the year. Total visitor arrivals as of the end of September 2009 recorded a decrease of 3.8 per cent over the comparative period of 2008. This contraction was associated with decreases in both air arrivals (13.1 per cent) and cruise arrivals (1.9 per cent). In contrast to the 240,288 stay-over visitors registered in 2008, air arrivals for the first three quarters of 2009 totalled 208,761. Due to the greater impact of the global economic crisis on American households, the decline in tourist arrivals from the US market was also the highest at 13.6 per cent.
For the period January – September, hotel occupancy rates contracted from 64.9 per cent in 2008 to 59.9 per cent in 2009, while occupancy levels for apartments weakened from 46.3 per cent to 45.8 per cent.
During the first three quarters of 2009, cruise arrivals totalled 1,144,948 visitors, a decrease of 1.9 per cent over the comparative period for 2008. This was attributed to the continued worldwide economic slowdown resulting in weaker tourism activity.
Construction intentions, as measured by project approvals slid downwards in terms of total value and number. Since the start of the year, there were 859 project approvals, 6.6 per cent fewer than the 920 approved in the same period in 2008. The weak outlook for non-residential buildings is also shown by the slide in the value of approvals by 13.6 per cent from $403.2 million in 2008. In the government category, projects were reduced to the minimum given the government’s commitment to reduce capital expenditures.
Narnia Ebanks, Statistical Officer
Economics and Statistics Office
T: 244.1616