Economy expands 1.4 percent, consumer prices fall sharply

The Cayman Islands economy expanded by an estimated 1.4 percent buoyed by strong growth in the hotel and restaurant, and real estate, rental and business services segments. 

The number of work permit holders increased 7.9 percent to 21,562, the Economics and Statistics Office’s first quarter economic report noted. 

Financial services, the largest sector in the economy, saw only marginal growth of 0.4 percent, following an estimated decline of 0.2 percent in 2014. 

The hotel and restaurant sector grew 5.8 percent, reflecting 1.1 percent higher total tourist numbers year on year. While cruise arrivals increased only slightly, air arrivals totaled a record 115,640 visitors in the first three months, the highest first quarter performance since 2003. This growth in “air arrivals was fuelled by on-going recovery amongst key source markets, with only the Canadian market recording contraction during the review period,” the report said. 

The real estate sector benefited from a jump in the value of property transfers by almost one third, to $145.9 million. 

Overall first quarter economic growth was just below the 1.5 percent rate during the same period in 2014. 

“Nonetheless, this is a solid pace considering that the U.S. had a GDP decline in the same period,” said Marco Archer, minister for finance and economic development. 

“Overall, the recent performance means that we are on track in achieving the 2.1 percent forecast GDP growth for the year,” he said. 

The construction industry contracted in the first quarter (-2.2 percent) as the value of building permits fell by almost half, but new project approvals jumped 11 percent. 

The wholesale and retail sector also declined (-3.1 percent) leading to lower merchandise imports. 

Meanwhile government’s fiscal performance continues to improve. The fiscal surplus was 1.7 percent higher than a year earlier at $151.9 million, while the central government’s outstanding debt was 5 percent lower compared to the same period in 2014. Central government’s debt totals $530.2 million. 

Consumer prices fall 

Consumer prices dropped again, by 3.6 percent in the second quarter of 2015 after a 0.4 percent decline in the first quarter. 

“Similar to the first quarter, the second quarter decline is traced primarily to the reduction in fuel prices this year compared to a year ago,” Mr. Archer said. 

During the quarter, the cost of electricity, gas and other fuels fell sharply by 25.7 percent year on year and 12.2 percent compared to the first quarter. The decline in fuel prices also drove down the cost of transport by 7.6 percent. 

The cost of supplied water dropped, while rental costs remained stable. 

Food prices fell by 1 percent compared to the first quarter as a result of declining prices for milk, cheese and eggs (-7.2 percent); fruit (-2.6 percent); fish and seafood (-2.3 percent); and bread and cereals (-1.8 percent). 

The cost of education (1.2 percent), clothing (1.6 percent) and communications (2.2 percent), in turn, continued to rise.