Cayman’s gross domestic product grew at an estimated rate of 1.1 per cent following three consecutive years of economic decline.
The economy is expected to continue to grow at 1.8 per cent in 2012, driven by the tourism, construction and financial services industries, according to the Annual Economic Report 2011 released by the Cayman Islands government’s Economics and Statistics Office. Inflation in 2012 is expected to be higher at 2.1 per cent due to oil price increases.
In the three years prior to 2011, Cayman’s economy had been impacted by the financial crisis and global economic downturn, resulting in a contraction of 0.4 per cent in 2008, 6.9 per cent in 2009 and 3.4 per cent in 2010.
In 2011, the Cayman Islands’ economy relied on a recovery of the services sector and was stimulated by increased demand for stay-over tourism services, financial services, business services and real estate, the report released on 27 June noted.
While air arrivals had another year of strong growth of 7.2 per cent, the number of cruise visitors slipped by 12.3 per cent. This resulted in a 9.3 per cent fall-off in the total visitor arrivals to 1.71 million in 2011.
The financial services industry’s performance was also mixed. New company registrations (11.1 per cent) new partnerships (22.9 per cent) and stock exchange listings (3.9 per cent) continued to recover. However, declines were recorded in mutual funds registration (1.9 per cent), insurance licences (0.3 per cent), and banks and trusts (4.9 per cent).
Construction declined in 2011, albeit at a significantly slower rate, measured by the value of building permits, which slid by 11 per cent to $183.1 million. The value of planning approvals also fell by 33.2 per cent to reach $220.8 million. Meanwhile, certificates of occupancy rose in value but declined in number.
Real estate activity rebounded strongly as the number of transferred properties rebounded by 5.5 per cent to 1,886, while the total value surged to $657.9 million due to a few of large transactions.
Although domestic credit from commercial banks expanded by $98.5 million to $3.1 billion, credit to the private sector contracted by 0.2 per cent. Overall, private sector credit declined as $160.2 million in loans were repaid by the services sector, trade and commerce sector and other financial corporations.
Public sector indebtedness to the local banking sector in turn increased by 37.1 per cent together with government capital spending. Total consumer goods imports grew by 2.3 per cent and total capital imports also increased.