STATE OF THE ECONOMY SNAPSHOT (Part Two)

By Staff Writer

Developments in key sectors of Cayman’s economy and society have been highlighted by Hon. Premier Wayne Panton in his key State of the Economy address, an important signpost ahead of the budget expected in late October.

Tourism, the financial sector, and construction were the key indicators of economic recovery while the Government continues to address issues of cost of living, employment, housing, healthcare, education, population growth and the state of government finances.

TOURISM

“For the first six months of 2023, over 235 thousand stayover tourists visited our islands, representing more than 80 per cent of the total in the first six months of 2019, when we experienced record arrivals. And cruise visitors are also recovering well, with over 740 thousand visitors by the end of June 2023. The transport, storage and communication sector expanded by 11.4 per cent. Our national carrier, Cayman Airways, has continued to expand and add new routes. Activities at our major seaport have grown to near capacity.”

FINANCIAL SERVICES

The Premier said the financing and insurance sector proved to be the engine of fiscal revenue during the pandemic when borders were closed and international tourism suspended. “This Government is committed to supporting the sector in every way possible. The recent announcement that all conditions are in place for the removal of Cayman from the FATF grey list is a testament of our commitment to the growth and health of financial services in this country.”

EMPLOYMENT

The highlight is the historically low unemployment rate, the Premier said.

“According to estimates from The Cayman Islands Labour Force Survey (LFS) Spring 2023 Report, the total labour force increased by 7.9% in the past year to include 58,669 people as of June 2023. Correspondingly, still maintaining its best in decades performance, the overall unemployment rate dropped to 2.4% in June of this year, and is expected to average 2.5% between 2023 and 2024, significantly down from 5.7% in 2021.”

He went on to credit “the foresight, wisdom and hard work of this Government, the Caymanian unemployment rate fell to 3.7% of the labour force in June of this year, compared to 5.1% for the same period in 2022 and as high as 8.5% in 2021.

The Premier also reported that the results of the Spring Labour Force also indicated that total employment rose to an estimated 57,266, of which 21,615 or 37.7 per cent were Caymanians with an increase of approximately 3,000 Caymanians in jobs.”

However, he also pointed out that as has long been the case, the Caymanians with the highest unemployment rate remain those without high school level education and further training.

“We have steadily increased the budget allocations for scholarships and vocational training for school leavers and other young Caymanians.”

POPULATION

According to the Spring 2023 Labour Force Survey, the mid-year population of the Cayman Islands was estimated to be 83,671. Of this total, Caymanians amounted to 38,926, or 46.5 per cent.

“Although the rapid population growth of the last few years was not anticipated or forecast, we are nevertheless working steadily to improve our roads and transportation network, alleviate the resulting traffic concerns and ensure that public service mechanisms such as health, education and safety are strengthened and expanded to meet these increasing demands.”

INFLATION

Inflation and its impact on the high cost of living is a matter of great concern.

However, Mr Panton noted that there are signs of the situation improving saying that ending June 2023, the consumer price index inflation rate was 4.1 per cent, down from a consumer price index inflation rate of 6.6% in the first quarter of 2023.

He said his PACT government has taken a series of measures to alleviate the financial burden on residents.

These include electricity subsidies for over 22,000 eligible households, increased exgratia payments to seafarers, veterans and the vulnerable, providing free school meals and removing import duties on healthy foods, baby products, feminine hygiene products and products that promote energy efficiency.

Mr Panton also listed the tourism worker stipend which he reminded continued well into 2022, support for small businesses, reduction of a variety of fees for seniors, extending the pension holiday for an additional year and assistance with scholarships and tuition for students.

He also the government is looking into the minimum wage matter.

HOUSING

The PACT leader reported that factors impacting the demand for housing, the supply of housing, the price of housing, access to financing and the availability and quality of rental housing are being reviewed and his Government is considering a number of recommendations on policy options available to the Government.

GOVERNMENT FINANCES

Defending his PACT policies, he stated, “We are a government that understands that we must make financially prudent decisions and that we cannot recklessly spend it all today; overspending will put our economy and fiscal independence at risk.”

On the state of government finances, a controversial issue, since Mr Panton’s recent indication that spending would need to be curtailed, he reported that “overall, I will say that the August Year-To-Date numbers follow the same trend seen in the first half of the financial year…The Government is cautiously expecting that it will only be marginally “shy” of the year’s targeted $1.037 billion, come 31 December 2023.”

He also said that to ensure sufficient funds are available for the remainder of the budget year, the Finance Committee of Parliament has approved and will shortly be asked to further approve, supplementary funding in the areas where spending is expected to exceed budget estimates.

According to the Premier, the Government expects to end the year positively with a small forecasted Operating Surplus.