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GDP (nominal): Provisional estimates for 2001, $3.57 billion. 13.8% ($495 million) from international companies, 11.8% from financial intermediation, 10.2% from wholesale, retail trade and repair services, and 7% ($220 million) from the hotel and restaurant sector.
GDP growth rate: Estimated 1.5% for 2002. Real GDP is expected to increase by 1.5% in 2003.
Per capita GDP: $54,291 (2001).
Inflation rate: 3.1% (July 2003).
Natural resource: Limestone, used primarily for building.
Agriculture: Products--semitropical produce, dairy products, flowers.
Industry: Types--finance, insurance, structural concrete products, paints, perfumes, furniture.
Trade: Exports (includes re-exports)--$41 million (provisional estimates 2002, quarters 1-3): semitropical produce, light manufactures. Imports--$745.5 million (2002): food, clothing, household goods, chemicals, live animals, machinery, transport, and miscellaneous manufactures. Major suppliers--U.S. 77%, United Kingdom (U.K.) 5%, Canada 7%, Caribbean countries 4% (mostly oil from Netherlands Antilles).
Bermuda has enjoyed steady economic prosperity since the end of World War II, although the island experienced a mild recession in 2001-02, paralleling the recession in the U.S. Bermuda enjoys one of the highest per capita incomes in the world. Its economy is based primarily upon international business and tourism. The Bermuda Monetary Authority (BMA) estimated that those two sectors represented 77.5% of the total balance of payments current account receipts of foreign exchange in the first three quarters of 2002. However, the role of international business in the economy is expanding, whereas that of tourism is contracting.
Bermuda is considered an offshore financial center and has a well-deserved reputation for the integrity of its financial regulatory system. An October 2000 KPMG report entitled "Review of Financial Regulation in the Caribbean Overseas Territories and Bermuda" states that the island's legislative framework is almost fully compliant with international standards, giving evidence of Bermuda's commitment to the prevention of money laundering and other financial crimes.
Aiming to meet or exceed international financial standards, the BMA has committed to being fairly transparent about its duties and responsibilities. For example, in response to the KPMG report on the U.K.'s Caribbean overseas territories, Bermuda enacted the Trust (Regulation of Trust Business) Act 2001. The legislation provides for the transfer of the finance minister's responsibilities to the independent BMA, with respect to granting and revoking trust company licenses. It also requires all individuals or companies operating trust companies to have a license unless they are exempt. Previously, only trust companies needed a license. Additionally, the legislation gives the BMA more comprehensive intervention powers. It can request more detailed documentation and, in the event of a problem, restrict a trust operator's license. Information is to be kept confidential, except in the event of a criminal investigation.
Bermuda enacted the Investment Business Act (IBA) in 1998 to regulate the island's financial services industry. In response to international directives, the government passed the Investment Business Act 2003 to further refine its terms. The act creates a balance between government regulation on the one hand and the competitive needs of Bermuda's most important industry--international business--on the other hand. By updating its regulatory framework, Bermuda has enhanced its reputation globally as an international standard-bearer. In return, international businesses registered in Bermuda are recognized as having met or surpassed the most stringent international criteria.
The effects of September 11 have had both positive and negative ramifications for Bermuda. On the positive side, a number of new re-insurance companies opened on the island, contributing to an already robust international business sector. On the negative side, Bermuda's already weakening tourism industry suffered as American tourists chose not to travel. The impact of Hurricane Fabian in September 2003 was yet another blow to the tourism industry.
By the end of 2002, there were 13,337 international companies registered in Bermuda, many U.S.-owned. They are an important source of foreign exchange for the island, and spent an estimated $986 million in Bermuda in 2001. The growing importance of international business is reflected in its increased share of GDP, up from 12.6% in 1996 to 13.8% in 2000. In 2002, international companies directly employed 3,592 persons, generated $395.5 million in employment income, and indirectly support or influence thousands of other jobs in Bermuda.
Tourism, Bermuda's second most important source of income, is an industry in trouble. In 1996, Bermuda welcomed 571,700 visitors to the island. By 2002, that figure had dropped to 483,622. Occupancy rates for 2002 averaged 55.1%, and were higher in the major hotels than at smaller properties. Visitors contributed an estimated $475 million to the economy in 1996, but that figure declined to $378.8 million in 2002. Although per capita spending by air visitors rose in 2001, direct employment in the tourism industry (5,700 jobs in 2000) and related industries is dropping in tandem with declining visitor numbers.
The 2000 census indicates a total of 36,878 filled jobs, with unemployment at 3%--down from 6% in 1991. Many Bermudians hold more than one job. In 2000, about 25% of workers were union members in one of the island's three primary unions: the blue-collar Bermuda Industrial Union, Bermuda's largest labor organization; the professional Bermuda Public Services Union, with a steadily increasing membership; and the Bermuda Union of Teachers.
Organized labor is high profile in Bermuda. Union action has been on the rise in recent years, but the second-term labor government has begun to take an increasingly hard-line stance in response to union action. The average annual days lost per worker as a result of labor actions dropped from a high of 65 in 1991 to a low of 0.8 in 1999. More recent figures, reflecting increased union action in the past four years, are not yet available.
Bermuda has little in the way of exports or manufacturing; almost all manufactured goods and foodstuffs must be imported. The value of imports has risen from $551 million in 1994 to $745.5 million in 2002. The U.S. is Bermuda's primary trading partner, with $567.5 million in U.S. imports in 2002. The U.K., Canada, and the Caribbean countries (mainly the Netherlands Antilles) also are important trading partners. Exports from Bermuda, including imports into the small free port, which are subsequently re-exported, increased from $35 million in 1993 to almost $51 million in 1999. Provisional estimates for the first three quarters of 2002 indicate $41 million in exports.
Duty on imports is a major source of revenue for the Government of Bermuda. In 2001, the government obtained slightly more than $175.2 million, or 29%, of its revenue base from imports. Heavy importation duties are reflected in retail prices. Even though import duties are high, wages have kept up for the most part with the cost of living, and poverty--by U.S. standards--appears to be practically nonexistent. Although Bermuda imposes no income, sales, or profit taxes, it does levy a real estate tax.
Bermuda is home to immigrants from other countries. 2000 census data reveal that U.K. immigrants comprise 27% of the immigrant population; U.S., 19%; Canada, 14%; Caribbean, 12%; and Portugal/Azores, 10%. 79% of the population is Bermuda-born and 21% is foreign-born.
In February 1970, Bermuda converted from its former currency, the pound, to a decimal currency of dollars pegged to the U.S. dollar.
Bermuda has 150 miles of private paved roads; 130 miles of public paved roads; 25 miles of historic, unpaved railroad trail, used as scenic trails; three ports, including the former U.S. Naval Air Station and Naval Air Station Annex; and one airport, located at the former U.S. Naval Air Station. It has seven radio stations, three television stations, a small cable microwave system, three cellular services, three submarine cables, two satellite earth stations, and four Internet service providers.