(CNS): What economists described as a pent-up demand as well as robust growth in financial services led to an inflation-fuelled expansion in domestic output last year, with the real gross domestic product (GDP) estimated to have expanded by 1.8%. The Cayman Islands Annual Economic Report 2021, released by the Economics and Statistics Office (ESO) Thursday, revealed that demand for consumer goods and real estate propelled growth in the local economy as it emerged from the slump caused by the pandemic.
Following the economic contraction in 2020 of more than 5%, overall indicators for 2021 point to an inflated accelerated growth in construction of 7.9%, real estate of over 6.3% and wholesale and retail trade grew by 5.4%, while tourism-dependent sectors still witnessed a decline.
But although Cayman’s nominal GDP per capita income was estimated at $72,580 for 2021, the reality is that most people are not benefiting from the wealth they play a part in generating. Three-quarters of the workforce earns less than $72,000 per annum.
But the small number of higher income earners here as well as international trading partners led to a rise in demand for Cayman’s key services, driving the economic expansion in the offshore industry as well as the property market, which is now distorting the economy. Real estate activity surged last year and the total value of property transfers rose by 75%. The value of building permits in Grand Cayman also rose by over 29% and the value of planning approvals by more than 10%.
The official average inflation rate in 2021 was 3.3%, compared to a 1% increase in 2020. But the statistics fail to reflect the reality, given the steep surge in inflation towards the year emanating mainly from rising energy and food prices.
Total employment increased by 10.3%, but this lagged behind the expansion in the labour force, which resulted in the unemployment rate rising to 5.7% overall and an 8.5% unemployment rate for Caymanians.
Predicting that the GDP will expand this year by a whopping 3.4% as a result of the expected recovery in the tourism and transport sector, the local economists said the inflation rate is expected at 7.9%, arising principally from external pressures.
However, just one month ago the ESO had already reported that inflation had outstripped these predictions. By the end of June inflation was already running at more than 12%, with no indications of any notable decline during this third quarter.
Meanwhile, the overall unemployment rate is still projected to be 4.5%. Since that generally translates to a higher rate for local workers, Caymanians will continue to face further unprecedented challenges fuelled by the cost of living and stagnant low pay, regardless of the growth in GDP.
See the Cayman Islands’ Annual Economic Report 2021 on the ESO website.
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“the reality is that most people are not benefiting from the wealth they play a part in generating”
This is wrong on both counts.
The majority of the “wealth” in the GDP figure is generated from the financial services industry and the fees paid by funds to be in Cayman. The reality is that the majority of people play no part in the generation of this wealth. It’s concentrated in the law firms and ancillary industry that surrounds it. Given the proportion of GDP that this creates, the industry employs very few people as a proportion of the labour force. Sure, car mechanics get these folks to work, realtors find them places to live and bar staff get them drunk but they’re not “producing wealth”, they’re benefiting from it. Without financial services all of these things go to the wall.
Pastor Alfredo
It is unconscionable that the minimum wage remains at $6 per hour. That is well below a living wage.
If a business needs $6 per hour labor to survive, it should not be in business.
Good point.
What BS. Do to the grocery store and tell me inflation is only up 1.1%.
Food inflation on this island is insane. Either the grocery stores are to profitable or someone is counting wrong.
Wisdom to that statement.
that’s 2021 – please read the article.
This report is last year… yes it took 8 months lol
Oh boy. The stats are so not timely.
Are these figures in CI or USD?
CNS: This being the Cayman Islands, the government’s economic report is in KYD.
Some get wages in USD that is why analyses don’t always make sense.
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