During a recent TV interview, Premier Alden McLaughlin issued what is, perhaps, an extraordinary warning in regard to the economics of the Cayman Islands.
He said, “I think we have to be careful in another year or so that we don’t wind up with an economy that is starting to overheat because of the number of development projects which are likely to be under way then.”
In other words, Mr. McLaughlin is concerned that future demand (for labor, goods, services and accommodations) caused by burgeoning business and construction activity may threaten to outpace the supply — leading, presumably, to price bubbles, runaway inflation and any host of loosely defined economic catastrophes.
He added, “That is a worry I’m happy to have at that stage.”
Worry not, Mr. Premier. We can assure you that, at this juncture in Cayman’s history, “overdevelopment” and “overheating” are among the least phenomena to be feared.
Consider the following data points:
- Last year’s inflation rate was 1.5 percent. The inflation rate in 2013 was 2.2 percent, identical to the average in Cayman over the past 15 years, according to the Economics and Statistics Office.
- During government’s 2013/14 fiscal year, Cayman’s GDP increased by 1.6 percent, according to Finance Minister Marco Archer, who said in November that the forecast for 2014/15 is an increase in GDP of 2.1 percent, and for the next several years an average of 2.6 percent per year. Mr. Archer said the “general consensus” is that an annual GDP growth rate of 2.5 to 3.5 percent per year “is considered respectable.”
- Overall unemployment in 2013 was estimated at 6.3 percent (including 9.4 percent for Caymanians). Mr. Archer anticipates that dropping to 5.9 percent this year, and to 4.9 percent in the 2017/18 fiscal year.
Couched in layman’s terms, Cayman’s economy appears to be emerging finally from the global financial crisis, according to standard metrics, and if current trends hold true, should produce greater wealth and job opportunities for the country’s inhabitants in the coming years. That, of course, depends largely on private investments in local construction projects, as Mr. Archer also stipulated.
Put another way — Cayman’s economic climate has been the polar opposite of “overheating”; indeed, in recent years its temperature has rivaled downtown’s Minus5 Ice Bar in terms of frigidity. (As an aside, we will observe that only a dyed-in-the-wool bureaucrat could believe that a central government can successfully regulate the temperature of a country’s economy in thermostatic fashion.)
We’re not yet ready to declare the premier’s off-the-cuff assertion as a full-blown theory of “Aldenomics” worthy of line-item evisceration. Indeed, we believe that, in general, Premier McLaughlin understands that new development — and plenty of it — is the most effective antidote for Cayman’s economic and employment ailments (next to a drastic reduction in the size, and expense, of our bloated public sector).
While we’re no fans of “global warming” or rising sea levels, we do gladly anticipate the expected warming of Cayman’s economy and the resulting “high tides” that will lift our country’s financial vessels.
Rather than sharing unfounded forebodings, our country’s leaders would be better off, when they discuss Cayman’s economy, to highlight the many positive developments on our country’s horizon, such as Dart’s designs for Seven Mile Beach, the Ironwood golf development in Frank Sound, Health City Cayman Islands in East End, and the planned resort in Bodden Town’s Beach Bay area, as well as the ongoing cruise dock and airport projects.
To say that Cayman’s economy is heating up may itself be an overstatement, but, at the very least, it looks like it could be beginning to thaw.