Bermuda: Economy

Bermuda has enjoyed steady economic prosperity since the end of World War II, although the island has experienced a recession since 2007, paralleling the global economic recession. Bermuda enjoys one of the highest per capita incomes in the world. Its economy is based primarily upon international business and tourism. In 2009, international business and tourism accounted for 74% of the total balance of payments current account receipts of foreign exchange. Generally, the role of international business in the economy has been expanding, whereas that of tourism has been contracting.

Bermuda is an important regional and global offshore financial center with a robust financial regulatory system. The Bermuda Monetary Authority (BMA) is designated as the supervisory and enforcement authority. The government cooperates with the United States and the international community to prevent money laundering and terrorist financing and continues to update its legislation and procedures in conformance with international standards. It is the third-largest reinsurance center in the world and the second-largest captive insurance domicile, with firms based in the jurisdiction writing significant volumes of business in the U.S. and U.K.

In 2010, 15,078 international companies were registered in Bermuda, many U.S.-owned. They are an important source of foreign exchange for the island, and spent an estimated $2 billion in Bermuda in 2009. The importance of international business is reflected in its share of GDP. This sector provided $1.5 billion in total output (current market prices), representing 26.1% of total GDP, or a 3.7% decrease compared to 2008. International business is no longer the island's largest employer, with 4,293 jobs in 2009, down from 4,761 in 2008. Provisional estimates for 2009 state that there were 4,758 jobs in wholesale and retail and repair services and 4,680 jobs in hotels and restaurants.

Historically important for employment and tax revenue, Bermuda's tourism industry had been experiencing difficulties for many years. The travel industry, particularly the airline sector, has been declining for decades. However, a total of 585,266 visitors arrived in 2010, up from 559,048 visitors in 2009. This was a direct result of an active year on the cruise and yacht front. Hotel occupancy rates averaged 54.0% in 2010, which represents an increase of 5.7% from 2009. Visitors contributed an estimated $383.9 million to the economy in 2010, up from $331.3 million in 2009. This compares to $475 million in 1996.

Bermuda has little in the way of exports or manufacturing; almost all manufactured goods and foodstuffs must be imported. The value of imports rose from $551 million in 1994 to $1.051 billion in 2009. The U.S. is Bermuda's primary trading partner, with $663 million in U.S. imports in 2009. The U.K., Canada, and the Caribbean countries also are important trading partners. Exports from Bermuda, including imports into the small free port that are subsequently re-exported, decreased from $35 million in 1993 to $28 million in 2009.

Duty on imports is a major source of revenue for the Government of Bermuda. In 2009-2010, the government obtained $225.4 million, or 24% of its revenue base, from import duties. 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. Poverty was until very recently practically nonexistent; however, in 2007, 11% of the population was below the low-income threshold of $27,046 per year. Although Bermuda imposes no income, sales, or profit taxes, it does levy a real estate tax.

Bermuda is home to immigrants from other countries. According to the 2000 census, 79% of the population is Bermuda-born and 21% is foreign-born. U.K. immigrants comprise 28% of the immigrant population; U.S., 20% (although the U.S. Consulate estimates that the figure is closer to 40%); Canada, 15%; Caribbean, 12%; and Portugal/Azores, 10%. A new census was conducted in May 2010 with results to be released in 2011. In February 1970, Bermuda converted from its former currency, the pound, to a decimal currency of dollars pegged to the U.S. dollar.

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