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Government Predicts Strong Growth For Cayman Economy

by Amanda Banks,, London

09 May 2007

The Cayman economy is expected to continue its strong growth in the next financial year (July 2007 to June 2008), according to Financial Secretary Kenneth Jefferson.

Delivering the estimates of revenue and expenditure for the coming year, Jefferson forecast a 3.5% growth in gross domestic product, inflation also at 3.5%, and unemployment at 3.6%.

The 2007/08 GDP figure compares favourably to that expected at the end of the current financial year (1 July, 2006 to 30 June, 2007), which is projected to be 4.2%. The forecast slight drop in the next financial year's GDP indicates that post-Hurricane Ivan, intense reconstruction activity is almost over and the economy is settling, Jefferson said.

Inflation for the current period is expected to be 2.2%, and unemployment 3.1%.

"The Cayman Islands economy is expected to remain robust due to the continued recovery of the tourism sector, the near completion of construction efforts and the continued expansion of the financial services sector," Jefferson said as he presented the 2007/08 Budget in the Legislative Assembly on 27 April.

In an address entitled 'Shaping Our Future', he revealed estimates for operating expenses of $469.2 million, interest payments on debt of $12.4 million, and operating revenue of $499.1million, producing an operating profit of $17.5 million. He said that assets at 30 June 2008 will stand at $990 million, compared to $504.7 million in total liabilities, meaning that the government's net worth will be $485.3 million.

Further supporting his view that the Cayman Islands is on a path of sound growth, the Financial Secretary referred to an August 2006 report by Moody's Investors Services, in which Cayman's ratings were raised to Aaa and Aa3.

"These ratings in the 2006 Moody's report provide an independent verification not only of the government's ability and willingness to meet its obligations, but they also indicate that the Islands' macroeconomic fundamentals are solid," Jefferson concluded.

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