Economy of Bermuda

Bermuda is a British Overseas Territory comprising a number of islands, with an area of 54 km² (20.8 sq mi), located in the North Atlantic Ocean, which in 2016 had a population of 65,331.

Bermuda now has the fourth highest per capita income in the world, primarily fueled by offshore financial services for non-resident firms, especially offshore insurance and reinsurance, and tourism. In 2014, 584,702 tourists visited the territory. Tourism accounts for an estimated 28% of gross domestic product (GDP), 85% of which is from North America. The industrial sector is small, and agriculture is now severely limited by a lack of suitable land. About 80% of food is imported. International business contributes over 60% of Bermuda's economic output. A failed independence vote in late 1995 can be partially attributed to Bermudian fears of scaring away foreign firms. Government economic priorities are for further strengthening of the tourist and international financial sectors.

The major Bermudian industry since the 1800s was the export by sea of early vegetables and flowers to New York: Bermuda had three crops per year. The Bermuda Botanic Gardens (now with 38 acres) had been established in 1898.

In 1922, complete, concise and clear acts dealing with agriculture were placed on the Bermudian statute book; inspection of produce was initiated; and seed testing began. Local seedsmen were registered in 1923. Mr McCallan, the Agricultural Director, reorganised the Agricultural Exhibition for 1923. Seed potatoes were gradually improved after much investigation with US experts. A local farmers' market started in 1923. For a year in 1921–23, Professor H H Whetzel of Cornell University advised remedies for the cash crop diseases of potato blight, onion thrips, celery leaf spot, lily Botritis, and melon mildew. He suggested that the colony should appoint a full-time plant pathologist. During this time, exports of agricultural products to the United States contributed the most to Bermuda's economy.

Lawrence Ogilvie from Scotland was the Government's plant pathologist from September 1923 to April 1928. He introduced regulations in 1924 governing the control of local diseases and pests, and the import of plants – so vital for an island. Import embargoes applied for banana plants, lily bulbs, sweet potatoes, citrus fruits from the West Indies, and certain Irish potatoes. In 1924 a concrete fumigation chamber was built to fumigate infected imports. Good crops of celery were achieved in the 1920s. Citrus cultivation was affected by the Mediterranean fruit fly and only really developed in 1944.

The early Easter-lily bulb exports to New York and the Isle of Man – high-value and vital financially to Bermuda – became badly diseased from the late 19th century to the mid-1920s. In 1924 Lawrence Ogilvie (age 25) saved the industry by identifying the problem as a virus (not aphid damage as previously thought) and instituting controls in the fields and packing houses. There was a marked improvement in exporting 23 cases of lily bulbs in 1918 to 6043 cases in 1927 from the then 204 lily fields. Still in his 20s, Ogilvie was professionally honoured by an article in Nature. The lily export trade continued to flourish until the 1940s when the Japanese captured much of the market.

Bermuda has had steady economic prosperity since the end of World War II, although the island has experienced recessions, including during the early 1990s, when the contraction of the economy led to a population reduction of 2,000 people (with work permits of many long-term residents not being renewed), and a mild recession in 2001–02, both paralleling recessions in the United States. Its economy is based primarily upon international business (especially re-insurance, for which it is now a world centre) and tourism, with those two sectors accounting for more than 70% of the total balance of payments current account foreign exchange receipts. However, the role of international business in the economy is expanding, whereas that of tourism is contracting.

The Bermuda Monetary Authority (BMA) is an independent regulator of Bermuda's financial services sector, including the Bermuda Stock Exchange. The BMA is not a central bank, and does not provide lender of last resort facilities. The BMA has licensed four local banks: Butterfield Bank, Clarien Bank, Bermuda Commercial Bank and the HSBC Bank Bermuda. Bermuda's currency is the Bermudian dollar, which is pegged to the US dollar on a one-to-one basis. Both currencies circulate in Bermuda on an equal basis, but the Bermudian dollar is not normally traded outside the territory. In May 2020 the Bermuda Government's debt stood at $2.68 billion and the debt limit was increased to $2.9 billion in response to COVID-19 related expenditures. The BMA implemented Basel II in Bermuda from 1 January 2009 and Basel III from 1 January 2015, combined becoming the final rules for the enhancement of capital adequacy and liquidity in Bermuda's banking sector.