Cayman’s economy grew at an annualized rate of 3.7 percent in the first half of 2018, setting new highs in employment and inflation in the process.
According to the Economics and Statistics Office, the sectors with the highest estimated growth rates were hotels and restaurants (15.2 percent), construction (8.9 percent), transport, storage and communication (6.5 percent), and business activities (mainly legal and accounting) (3.8 percent). The finance and insurance services sector, which continues to be the largest contributor to gross domestic product, grew by 1.3 percent through June of 2018. The better-than-expected growth rate has led the Economics and Statistics Office to revise its 2018 growth estimate from 3 percent to 3.4 percent.
“The revision is supported by the stronger-than-projected growth in the U.S. economy during the second quarter, which has the potential to boost the demand for local services in the second half of the year,” the office stated in its report for the first half of 2018. “General stability is also expected to continue in the financing and insurance sector, which will help to maintain the forecasted path.”
The growth fueled an increase in employment numbers, with total employment increasing to 42,717 workers – a new all-time record – and Caymanian employment increasing by 3.4 percent to 19,842.
Employment among permanent residents rose by 34.6 percent to 4,283, which the Economics and Statistics Office attributed to the increased number of permanent residence applications processed by government. Employment among non-Caymanians declined by 4.1 percent to 18,592.
The overall increase in employment helped lower the unemployment rate to 3.4 percent, the lowest rate since 2007.
The inflation rate also averaged four percent through June 2018, the highest half-year increase since June 2005, according to the Economics and Statistics Office.
Inflation increased in all sectors but restaurants and accommodations, which decreased by 0.1 percent. The largest increase in prices was in the transport sector, which increased by 12.6 percent. The Economics and Statistics Office attributed this to a sharp rise in air transport of 52.3 percent, as the cost of U.S. gulf coast jet fuel soared by 61.3 percent. Increases were also seen in the cost of fuel for motor vehicles.
“Despite stable housing rents, the price index for housing and utilities rose by 3.6 percent as the cost of electricity, gas and other fuels surged by 20.5 percent.
“This generally reflected the rise in international crude oil prices during the period,” the Economics and Statistics Office stated.