Cayman’s economy grew at an annualized rate of 3.6 percent through the first nine months of 2018, and the annualized inflation rate decreased slightly to 3.8 percent, according to a report released this week by the Economics and Statistics Office.
All sectors of the economy grew through the third quarter of last year, with the largest increase taking place among hotels and restaurants (11.5 percent), construction (6.9 percent), transport, storage and communication (6.3 percent), and business activities, mainly legal and accounting (4.5 percent).
The financing and insurance services sector, which is the largest contributor to Cayman’s GDP, grew by 1.5 percent during the review period, according to the Economics and Statistics Office. Growth in the financial sector was boosted by a record performance from the Cayman Islands Stock Exchange, which saw a 450-company increase in its listings, putting the total number of companies listed there at 1,579 as of the end of September.
The increase in listings raised the stock exchange’s market cap to US$299.8 billion at the end of Q3, the highest on record, the Economics and Statistics Office stated.
The 3.6 percent growth rate has Cayman on target to experience total GDP growth of 3.4 percent, according to the Economics and Statistics Office.
In terms of prices, the inflation rate averaged 3.8 percent through Q3 of last year, a slight decrease of the annualized rate of 4 percent through Q2. The Economics and Statistics Office projects the inflation rate for 2018 to be 3.5 percent.
“Despite continued increase in international crude oil prices, domestic inflation slowed in the third quarter of the year,” the Economics and Statistics Office stated. “Additionally, average inflation in the U.S. slowed to 2.4% for the year. These movements in prices support the current inflation forecast of 3.5% for the year.”
Higher prices for the first nine months of the year were recorded in all divisions except clothing and footwear and restaurants and accommodation, which went down by 0.4 percent and 0.2 percent, respectively. The highest absolute increase in prices was seen in transport (10.5 percent), food and nonalcoholic beverages (4.4 percent) and housing and utilities (4.1 percent).
The 4 percent inflation rate in June 2018 was the highest half-year increase since June 2005.
At the Chamber of Commerce’s legislative luncheon last month, Premier Alden McLaughlin acknowledged the concerns many have in the territory about the recent spike in prices. But while prices have increased relatively drastically over the last year, they have been relatively stable over a five-year period, Mr. McLaughlin said.
“Economists among you may point out that such is the nature of price variations over time and that these recent figures come on the back of a period of deflation – falling prices – in the Cayman Islands,” he said at the luncheon. “And so, taking a longer-term view, prices in the Cayman economy in September 2018 were actually only 2.5 percent higher overall than they had been in September 2014. That represents a significant five-year period of overall low inflation.”