Local economy heating up with 4% growth
George Town cargo port, Grand Cayman
(CNS): The local economy is growing much faster than predicted, and while this is good news for business and government coffers, the increased economic activity across all major sectors is fuelling inflation. Gross domestic product was up 4% in the first quarter of 2018, and consumer demand led to the highest second quarter growth in imports since 2005 and more than 15% higher than the same time last year. Government has a record surplus for the first half of the year but inflation is now running at 4.8%, squeezing those on fixed income and low salaries.
According to the Economics and Statistics Office report for the first quarter of this year, all major sectors of the economy registered significant growth. Finance Minister Roy McTaggart said government was on a healthy path to maintaining Cayman’s economic growth and moving from strength to strength annually. “The 4.0% GDP growth estimate for the first quarter of 2018 is stronger than the 2.9% estimated,” he noted.
The accelerated growth for the quarter was aided by a record 20.6% increase in tourist arrivals, as well as a 41.7% rise in new company registrations, with new partnership recordings rising by 28.7%. Stock exchange listings rose by 30.9%, registering the highest level since 2009. Government coffers fared extremely well, recording a surplus of $190.7 million during the first half of this year, achieving the highest recorded first-half surplus in history.
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Government continued to pay down the public debt, which had stood at $483.3 million in March last year, bringing it down by around $50 million to a new low of $432.8 million at the end of June.
“Our surplus thus far is significant, our debts continue to fall. We have proved, and are continuing to prove, that we listen and we act to ensure that our robust economy continues to thrive at present and will endure into the future,” McTaggart added.
Caymanians have been spending at a high rate this year, with the Quarterly Trade Statistics Bulletin recording over $500 million worth of imports for the first half of the year.
“The trade data in the second quarter gives a very strong indication of the sustainability of our economic growth,” the minister said. “While the second quarter increase in consumer prices for goods and services sold within the Cayman Islands rose to 4.8% in the second quarter of 2018, bringing the cumulative inflation rate to 4% for the first half of 2018.”
McTaggart blamed the inflation on the price of fuel, which is having a significant knock-on effect.
“Unfortunately, we have been impacted in this regard by global market dynamics. Fuel prices in general are up,” he said, pointing to the increases that has caused, from local transport costs to electricity bills.
The government recently introduced a cost-of-living salary increases for public sector workers and is reviewing pay scales for jobs where pay has stagnated, such as teachers, that it says will help to lessen the impact of an increased CPI on a large segment of the population.
“The uplift for civil servant pensioners as well as retired Caymanians needing assistance will also help. And of course on 1 November, the personal import duty allowance when shopping overseas will be increased to $500 from $350,” he added.
However, low pay remains a significant problem for those in the private sector, and government shows no sign of completing the review of the minimum wage. The Labour Force Survey for October is now underway and when that is published it will reveal more about current private sector pay levels.
However, the findings in the last report suggest that more than half of the workforce earns less than $3,200 per month.
increased GDP …due to importing poverty…lol
I blame those foreigners on work permits.
This plays to conflicted board members like ALT and others that stand to directly benefit from an expansion of our port so that they can bring their boats in – eg. Thomson/Tropical Line’s new 1100TEU ships. Tropical has already invested $150,000,000 in 6 new boats underway at the Wenchong shipyard for delivery in next 6 months.
https://www.tropical.com/news/2018/the-bulletin-october-2018
The most important thing is that we continue to chase money and ignore our kids educational standards
Just jealous comments.
growth is useless if you don’t tackle the cost of living and doing business.
ppm have failed on both counts.
What a ridiculous comment
This government doesn’t care about long term…Aldart knows he’s out after this term (which he had to manipulate riding to get elected) but has taken care of his future while he has given away the long term opportunities and rights of Caymanians.
Wow I live in the best county in the world. No wonder no one wants to leave.
Disagree 3.35 , Long term is the whole point. The Port needs to grow to deal with the Long term demands that it will face.
An amazing achievement!! Private sector and CIG working together to create one of the best economies in the world.
I really like CNS , article headline , luckily government didn’t say that collection pan is over flowing . But I think that we should take the increase for half of what’s worth and still be happy . And remember that it is a very hot fall season with pier and everything else .
we really do not need the cruise port for environmental reasons, do you not get it yet?.
Correct 3.19, we don’t need it for environmental reasons, we need the Port for practical reasons.
Stop destroying my world.
If these are nominal rather than Real GDP, the whole article founders on the premise that we are growing. When inflation outweighs nominal GDP chances are the real value of goods and services are shrinking or static. Any fool can say the economy is growing when prices go up. And CNS – basic lesson in economics. There are multiple reasons for inflation. Overheating because real growth raises demand and outstrips supply is only one ( and not consistent with the inflation rate outweighing real economic growth). Price inflation caused by relentless government harvesting of taxes and duties and then spending the money on non productive activity is another – and one consistent with the record tax take.
It would have taken you less time to click on the link to the ESO a see that it’s 4% real GDP not nominal.
Well a fair slice of the increased Gross Domestic Product must have been accounted for by Ju Ju’s “magnificent arches” soaring into the sky at our shortly to become “world class airport”. In the meantime on arrival last night I found the parking machine still cannot accept CI$25 notes and not a single luggage trolley was to be found in the baggage collection area. There were also about 30 people waiting to pay duty and only one person processing payment. It seems we cannot cope with more than two flights arriving in close proximity even with our “expansion”. I hope the CIAA does not put up a welcome sign over Christmas as it will not be appropriate.
Here’s something to cool down the economy, so don’t worry.
https://hubbis.com/article/beneficial-ownership-registers-a-step-forward-or-unnecessary-nuisance
except business registrations up 50%. i guess those people are just stupid.
Can we really be proud of a 4% GDP and continued economic growth when the majority of the citizens have low incomes?! Yes, people are employed but some have low paying jobs and many with more than one job! There are so many that can’t keep up with inflation and are living pay check to pay check. For some it has gotten even dire when having to borrow money to make it to pay day! Valid there are many people that live above their means but there are many that don’t! People just trying to live!
Minister McTaggart mentions the cost of living increase of civil servants recently…. but even with this….. how far behind are salaries?…. at least 10%! Veterans and seamans have gotten must needed increases but how many are still on the indigent list?! What I wish the Minister would do is to put this economic growth into perspective of all factors and really be honest in discussing economic growth or lack thereof. A country or government that celebrates economic success when the majority of your people are living in poverty is highlighting success… but failures for the government to really address the real issues!
If GDP weren’t growing those on low incomes would more than likely make even less!
I love the statement that “fuel prices in general are up”. A quick Google shows that fuel prices in the US are pretty much the same as they were six months ago (went up a bit and came back down). I guess he means the prices in Cayman…
Fuel prices in Cayman are regulated by the mafia.
Just got back from Tampa where gas is u s $ 2.7 for premium, so sad where in the Brac is c i $ 5.14 and the dutirs is only
Does no one understand the simple concept of economy of scale?
You could have a profit margin of 0.01c per sale, and if you got a million clients to make a sale to, you could survive off such a razor sharp margin.
On the other hand you got maybe 1000 customers on the Brac. Profit margin has to be increased in order to make the desired profit, resulting in higher prices where there’s lower population.
Bracka
Don’t worry about fuel prices, OFREG are monitoring the situation and will step in if necessary once they get back from all their business trips.
This is nothing but smoke and mirrors to make the record look good. The influx of cheap labor has devastated the construction industry; all bids must be cheap in order to get the job. Materials and operating expenses are constantly increasing but not the average workers rate of pay nor the amount that a contractor can get a project for. Guess as long as the fat cats & elite class are doing good who cares about the average person?
As someone who puts in bids for construction work around here that’s pretty accurate. Would love to give my guys a raise but I can’t stay competitive if I do…
Think its bad now, just wait till CHEC & Decco get to bring in all the Chinese semi slave labor for the dock and every other job they can take over. That will finish it off for good then! Got to love the Unity Team Government!
If we can sustain 10% growth for the next 20 years, we will be able to pay off 8% of the debt that we accrue in the same period. Good Luck.
Time for government to start a sovereign wealth fund and develop a plan for Cayman’s future
Nice idea if the surplus were excess but we’re still massively in debt. Besides, who you going to get to manage this fund?
Who could we get to manage the fund?……… I don’t know, but I could give you a list of who NOT to get!
So we really do not need the cruise port that we cannot afford to start with.
Of course we do, we HAVE to keep up with the Jones even if it kills the average citizen financially. I mean how will it look when everyone has a brand new dock owned by a foreign power and we don’t. Seriously bro get with it.
ok I couldn’t keep a straight face typing all that.
You forgot to add that it will be owned by a communist foreign country as well!