The Cayman Islands economy grew for the third consecutive year in 2013, but fell short of government’s expectation until the third quarter of last year.
The 1.2 percent gross domestic product growth at constant prices was less than the expected expansion of 1.5 percent for the year and slightly lower than the 1.4 percent recorded for 2012. In 2011, the economy had returned to growth (0.9 percent) after three recessionary years.
“I am pleased to note that we had another year of economic growth for the Cayman Islands in 2013,” said Marco Archer, minister for finance and economic development.
In particular, strong demand for stay-over tourism-related services and financial and insurance services led the growth in economic activity during the year. Domestic demand for transport, storage and communication services was also robust.
The resulting growth in revenue for government in combination with a decline in government spending meant that central government recorded an overall fiscal surplus of $70.8 million for the first time since 2006.
“This much needed improvement in fiscal position led to a decline in the central government’s outstanding debt by $26.3 million, from $586.2 million as at end 2012 to $559.9 million as at end 2013,” Minister Archer said.
In real terms, gross domestic product reached $2,485 million last year. Based on a mid-year population of 56,212, real per capita income, or GDP per person, of $44,208 was higher than the 2012 level of $43,732.
Tourism services like hotels and restaurants showed the strongest growth (6.6 percent) buoyed by 7.4 percent more stay-over visitors last year.
Financing and insurance services, which make up nearly half of the economy, were estimated to have expanded by 1.7 percent. Value added from insurance services increased at a record pace of 7.5 percent as growth in gross premiums outweighed net claims, according to the Economics and Statistics Office’s annual economic report. Financing services, in turn, remained subdued (0.1 percent) due to the continuing softness of external markets, the ESO report said.
The transportation, storage and communication sectors (2.4 percent) were also bolstered by stronger stay-over tourism, as well as a higher volume of cargo transportation.
Growth in broadband connections and investments into the island’s fiber optics networks caused a slight expansion of the telecommunications sector.
Real estate, renting and business activities increased by 1.3 percent, as a result of higher registrations of companies and property transfers.
The annual economic report estimates that other sectors suffered setbacks. Volume indicators for the construction industry, such as the total quantity of imported cement, indicate that the contributed less to the economy. In line with the reduction of government spending, the output from government services also declined by 1.5 percent.
The average inflation rate of 2.2 percent in 2013 was higher than the 1.2 percent a year ago, driven by price hikes for alcohol and tobacco, household equipment, clothing and footwear, education and miscellaneous goods and services.
The unemployment rate rose slightly to 6.3 percent compared to 6.2 percent in 2012 due to a higher unemployment rate for non-Caymanians. Unemployment among Caymanians, meanwhile, declined from 10.5 percent in 2012 to 9.4 percent in 2013.