The Cayman economy grew an estimated 1.6 percent in the first three quarters of 2015, down from 2.4 percent for the same period in 2014, according to a new report from the Economics and Statistics Office.
If the economy performed as expected for the last quarter, the ESO projects the gross domestic product will have increased by 1.7 percent for the year.
The ESO, in its third quarter economic report for 2015, notes that finance and insurance services led economic growth with a 3.6 percent increase. Real estate and renting, electricity and water supply, and agriculture and fishing also grew in the first nine months of last year.
Some sectors did see declines, including a 2.3 percent drop in wholesale and retail trade and about a 1 percent drop in producers of government services. Mining and quarrying, construction, and hotels and restaurants all recorded small drops of less than a third of one percent.
“Since the beginning of 2013, the local economy averaged 1.5 percent real GDP growth, that is, 10 of the last 11 quarters recorded positive economic growth,” Finance and Economic Development Minister Marco Archer said in a statement.
“The re-emergence of the local economy on a continuous growth path was achieved through sustainable fiscal policies, improved efficiency in the public sector, and the facilitation of private sector development,” he said.
While the economy continues to grow, the Cayman Islands recorded a 2.3 percent rate of deflation for the first three quarters of last year. The measure of inflation or deflation records how prices change in the economy, and 2015 had a drop in prices for each quarter in the first nine months of the year.
The ESO notes the drop in inflation “resulted mainly from lower price indices for housing and utilities (6.4 percent), transport (4.3 percent), restaurants and hotels (3.0 percent), and miscellaneous goods and services (1.6 percent).”
Prices increased for education, non-alcoholic beverages, recreation, clothing and several other categories, according to the ESO.
Government revenue dropped by 2.4 percent in the first three quarters of 2015, to about $520 million, but the government surplus continued to increase, to almost $105 million.
“I am also pleased to note that economic growth was achieved in the midst of continued improvement in our fiscal performance and the [U.K. Foreign and Commonwealth Office] has confirmed their agreement that the government is compliant with the Cash Reserve Days as required by the Framework for Fiscal Responsibility,” Mr. Archer said.
The Framework for Fiscal Responsibility, signed in 2011 by then-Premier McKeeva Bush, requires the Cayman government to get approval for its budget from the Foreign and Commonwealth Office. The framework prevents Cayman from taking out additional long-term loans and restrains government spending.
Government’s outstanding debt declined in the first three quarters of 2015, down by almost 5 percent to $518 million as government continues to pay off long-term loans. Government has paid off more than $50 million in outstanding debt since September 2013.
Government spending dropped in almost every category, led by a $5 million drop in personnel costs and a $10 million cut to supplies and consumables, according to the ESO report. The drop in personnel costs, the ESO notes, was “mainly due to lower payment towards the employer portion of pension liability and other personnel cost.”
The civil service added 36 employees in the first nine months of 2015 compared to the same period the year before.
Subsidies to statutory authorities, including Cayman Airways and the Health Services Authority, dropped by almost $1.5 million in the first three quarters of the year to less than $95 million.