The key economic indicators for the Cayman Islands collected by the Economics and Statistics Office show the economy has grown at an estimated annualised rate of 1.2 per cent during the first nine months of 2011, but credit to businesses declined during the same period by 7.2 per cent.
The economic expansion was the result of the first three consecutive quarters of economic growth since the financial crisis started to impact Cayman late in 2008, according to the Third Quarter Economic Report 2011.
The ESO report released on 23 February shows the most buoyant sectors were hotels and restaurants (7.5 per cent), real estate, renting and business services (3.4 per cent) and construction (2.4 per cent). Wholesale and retail trade, government services, and transport storage and communications, in contrast, were the main industries experiencing a contraction.
The slightly better than expected data in the first three quarters meant the annual GDP forecast was upgraded to 1.2 per cent from 0.9 per cent.
Consumer prices also increased more than expected by 1.2 per cent in the first nine months of 2011 leading the CPI forecast for the year to be increased to 1.4 per cent, mainly due to higher prices for transport (11.4 per cent), health care (3 per cent) and food (2.8 per cent).
In line with economic growth, imports of goods to the Cayman Islands jumped 6.1 per cent, following a decline in 2009 and 2010. However, despite the increase in the value of imported merchandise, the volume of imported goods fell slightly (0.4 per cent) after a 20.2 per cent decline one year ago.
Meanwhile, lending to businesses declined as credit to the trade and commerce sector dropped by more than $100 million (21.9 per cent) and fell by $22.6 million (11.3 per cent) to the services sector. Higher lending to the construction industry (32.9 per cent) only partially offset the overall decline. While businesses obtained fewer loans in the first three quarters, public sector and particularly central government local borrowing grew significantly by $143.4 million. The resulting 3.8 per cent expansion in overall domestic credit was driven mainly by a 58.6 per cent growth in public sector indebtedness.
Private households secured 2.5 per cent more borrowing compared to the same period in 2010, including higher borrowing for domestic property (1.9 per cent).
Premier and Minster for Finance McKeeva Bush said “the improved performance of the Cayman Islands economy in the first nine months points to the vigilance of the government in supporting the private sector in staging a turn-around from the recent downturn in economic activity.”
But given the increased economic uncertainty in the global economy, Mr. Bush said, “we, as the government and as a people, must continue to press ahead to ensure that the recovery strengthens and broadens to benefit all economic sectors.”
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