The Cayman Islands gross domestic product expanded in the first quarter, boosted by significant growth of more than 4 percent in tourism-related sectors, including hotels and restaurants, transport and retail.
The annualized growth rate of 1.5 percent in the first quarter 2014 compared to a decline of 0.6 percent during the same period last year.
Government expects a continuously growing economy for the rest of the year.
“The first quarter performance suggests that the economy is on a sustainable recovery path,” said Marco Archer, minister for Finance and Economic Development. “Furthermore, it is broad-based as a number of sectors have contributed to it. Given this performance, I am cautiously optimistic that we will see an overall GDP growth of 1.9 percent in 2014,” he added.
This forecast would be considerably higher than the economic performance of the past three years which, after a three-year recession, reached just 0.9 percent in 2011, 1.4 percent in 2012 and 1.2 percent in 2013.
The Economics and Statistics Office report on the first quarter economic performance also shows a positive development in real estate, renting and business services, construction activities and agriculture and fishing.
The construction industry benefited largely from the planned condominium portion of the Kimpton hotel. However, the $53 million project, which accounted for 61.5 percent of all building permits, obscured a decline in all building permit subcategories other than apartments.
The strengthening tourism sector with growing air arrivals (5.2 percent) and recovering cruise arrivals (2 percent) was the most important factor driving the economy in the first quarter.
In contrast, finance and insurance and government services declined by 1.3 percent and 1.4 percent respectively.
In the financial industry the number of banks and trust companies continued to drop (-4.5 percent) and listings on the Cayman Islands stock exchange were also down 12.1 percent compared to the same period in 2013. This was offset by a larger number of registered funds (2.5 percent), in particular master funds, a surge in new company registrations (20.3 percent) and a small increase in the number of class B insurers (2.6 percent).
The projected economic expansion for the year will rely mainly on the recovery of the financing and insurance sector and the sustained growth of construction and tourism, the ESO said.
The positive economic performance in the first three months of the year also helped improve government finances.
The fiscal surplus increased from $131.8 million in the first quarter of 2013 to $149.4 million this year, resulting from both higher revenue (4.5 percent) and a decline in total expenditure (-2.4 percent). Despite a 2.9 percent drop in total work permits, revenue from work permit and residency fees increased 15.3 percent. Revenue from financial services licenses jumped 13.1 percent.
Lower personnel costs and subsidies were the main factors causing the decline in government’s current spending.
The central government’s total outstanding debt fell to $558.3 million at the end of March 2014, down from $582.6 million a year earlier.