For the first time since 2008 when the global financial meltdown begun impacting economic activity in the Cayman Islands, the country’s gross domestic product rose in the first quarter of 2011 at an estimated rate of 1.2 per cent as compared to the same period in 2010.
Economic activity in the same quarter of last year recorded a decline of 1.3 per cent compared to the first quarter of 2009.
The major sources of the modest recovery in the first quarter of 2011 came from the following sectors: Hotels and restaurants, financing and insurance services and construction. Hotels and restaurants were boosted by the strong growth in tourist arrivals: Air arrivals by 6.8 per cent and cruise ship passengers increased by 8.2 per cent.
In financial services, new company registrations increased in the first quarter by 11.9 per cent. Meanwhile, total domestic credit of local commercial banks increased by $57.7 million to reach $2.9 billion. This increase went to the public sector, which expanded its indebtedness to the local banks by 32.4 per cent. Meanwhile, credit to the private sector contracted by 0.7 per cent.
Amidst the increase in domestic credit, the weighted average lending rate rose to 7.4 per cent from 6.4 per cent a year ago although the prime lending rate remained stable at 3.25 per cent.
In real estate, the number of property transfers increased by 20.3 per cent while the value of properties transferred in the quarter surged by 271.2 to $253.9 million.
The modest recovery in economic activity was accompanied by a benign growth in overall inflation despite an upsurge in fuel prices. The consumer price index inflation in the first quarter was recorded at 0.03 per cent. This was largely due to strong growth in food and non-alcoholic beverage, transport, and electricity-related cost amidst a decline in housing rentals.
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Graph Source: eso.ky, Economics and Statistics Office (ESO)