Cayman's Economic Resilience Recognised By Moody's
The Cayman Islands' maintenance of its favourable government foreign currency
bond rating demonstrates the jurisdiction's economic resilience in the face of
recent natural disasters and uncertainty surrounding the US economy, according
to Moody's Investors Service, the international ratings agency.
In a report published earlier this month on the Cayman Islands' macroeconomic performance, Moody's
noted the devastation caused by Hurricane Ivan in 2004, and observed that it
is this ability to bounce back from disaster that keeps intact the jurisdiction's Aa3 government foreign
currency bond rating - the highest in the Caribbean, and second only to Bermuda. Moody's Bond Ratings, or risk assessments, in part determine the interest that
the entity issuing the bonds must pay. Covering Cayman's 2007 performance, the report stated that economic growth has stabilized
to around 4% over the previous two years, after 6.5% growth was posted in 2005 during
the hurricane reconstruction period. It added that while there are signs of deceleration in the construction sector,
growth drivers - tourism and financial services - which comprise around 70%
of GDP, performed well. "Despite the ongoing global financial crisis, the Cayman Islands continues
in its role as a leader in the offshore industry, accounting for around 80%
of the world's mutual fund registrations. In 2007, new mutual fund and company
registrations remained in the double digits, and data for January 2008 shows
the same trend continuing," the report stated. "Tourism consolidated its quick rebound from [the] hurricane in the past
two years, particularly for stay-over (as opposed to cruise) arrivals, which
returned to pre-hurricane levels in 2007," the ratings agency added. Compiled by Moody's Vice-President and Senior Analyst, Alessandra Alecci, the
report also warned of challenges to tourism such as a cyclical slowdown expected
over the next couple of years, and a recession or slowdown in the economy of
the US, Cayman's main tourism market. It was further noted that compared to arrival numbers before the September 11th
terrorist attacks on the US, tourism numbers in 2007 reflected a reduction, but
there was still good news. "Despite a decline in tourist arrivals, tourism-related inflows are posting
robust growth, suggesting that tourists are spending more, even after adjusting
for inflation, as the Cayman Islands increasingly attracts high-income visitors,"
the report concluded. .
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