Halt to tourism weighed on Cayman economy, despite strong construction and finance sectors

Despite a booming construction sector and a solid performance of the key financial services industry, Cayman’s economic recovery was hampered by border closures and further declines in the hospitality sector during the first six months of 2021.

Overall, Cayman’s economy grew by an estimated 1.4% in the first half of this year, compared with an 11.4% decline during the same period in 2020.

Boosted by greater demand for services, Cayman’s economy expanded by an estimated 0.4% in the first quarter and 2.4% in the second quarter of 2021.

However, the economic picture remained mixed.

The construction sector continued to be the growth engine with an estimated increase of 13% in gross domestic product during the period, while related mining and quarrying expanded at the same rate of 13%.

Healthcare and social services activity, as well as government services, responded to the pandemic with growth rates of 6.5% and 5.2%, respectively.

This was also reflected in a 6.5% increase of civil servants working for core government from 4,158 in June 2020 to 4,428 in June 2021. The number of work permit holders rose during the same 12-month period by 5.8% to 26,058 in June 2021.

Business services (4.5%) and particularly the financing and insurance sector (3.2%), as the largest contributor to GDP, pulled the economy through the health crisis which kept Cayman’s borders closed during the period.

However, the continued sharp contraction of the hospitality industry, down by another 97.8%, as well as declines in transport (-13.5%), other services (-11.2%) and utilities (-2.6%) meant that overall Cayman’s GDP growth remained depressed.

For the entire year, government expects the economy to grow by 1.2% as financial services and construction continued to outweigh contractions in tourism and transportation during the second half of 2021.

The estimated consumer price inflation for the year was raised to 1.3% for this year, according to the first half year economic report by the Economics and Statistics Office.

The official unemployment rate for 20221 is expected drop slightly to 5% compared with 5.2% in 2020 as expansions in construction, and government services continue to absorb some of the fall-off in employment in the tourism sector.