Covid-19 restrictions lead to lower economic activity in 2020
Restrictive measures and a fall in global and local demand led to a reduction in Cayman’s economic activity in 2020. Real Gross Domestic Product (GDP) is estimated to have contracted by 6.7 percent for the year. This was the highlight of The Cayman Islands’ Annual Economic Report 2020 released by the Economics and Statistics Office.
The economic contraction interrupted a period of steady growth in the islands where growth averaged 3.5 percent per year in the five years before the pandemic. Notwithstanding, the decline was in tandem with a sharp reduction in global economic activity, which fell as varying restrictions hampered both supply and demand. The US economy contracted by 3.5 percent for the year relative to a growth of 2.2 percent in 2019.
Actual indicators point to declines across most sectors of the economy in 2020. The hotels and restaurants sector had the highest estimated decline of 76.6 percent due to the closure of the Islands’ borders. Other industries with the high estimated contractions were transport and communication (14.4%), other services (23.2%), and wholesale and retail trade (4.3%).
The central government recorded an overall fiscal deficit of $116.4 million, as revenue collection declined to $797.4 million and expenditure increased to $913.8 million.
Despite the deterioration in the fiscal account, the government reduced its outstanding debt from $284.4 million as at the end 2019 to $248.6 million as at the end 2020.