The Isle of Man’s economy is heading for a real growth rate of three to four per cent in the current financial year, the Government’s latest quarterly economic report indicates.
The report, produced for the Council of Ministers by the Treasury’s Economic Affairs Division, covers the three months up to the end of June.
Chief Minister Allan Bell has welcomed the report, saying: ‘The continuing growth of the Isle of Man economy is the result of a number of factors, including our policy of diversification, the partnership approach between Government and the private sector, and our competitive, reputable business environment.’
But he warned that continuing growth ‘will not get Government off the hook of its budgetary challenges’.
‘One of the reasons for our economic success is the island’s competitive tax structure, but that structure does not produce growth in public revenues at the same rate as growth in the economy.
‘There is something of a disconnect between the two, so we cannot rely on economic growth alone to bridge the Government’s fiscal gap.
‘Four per cent growth doesn’t mean four per cent increase in Government revenues.’
The quarterly economic report states: ‘The local economy remains stable and on course for meeting expectations of real growth of 3-4 per cent in 2013/14.
‘Inflation is 2.9 per cent and with global food prices falling and with manufacturers’ prices also tightly constrained, the inflation outlook is not threatening.
‘The numbers in employment, as per tax records, are at a record high.
The report provides positive updates and outlooks for various sectors including manufacturing, e-business, shipping, aircraft registration, clean tech and tourism.
But it shows that some of the inward-facing local sectors – construction and retail – are struggling.
It says manufacturing offers ‘good growth prospects and over 50 additional jobs a year ‘if skilled workers can be provided.
The E-business sector is continuing to grow rapidly, and prospects for the industry in terms of organic growth and by the attraction of new business are ‘good’.
The report states construction industry activity levels continue to be flat, with ‘competition intense’ for government projects.
Construction remains the sector with the highest level of unemployment.
‘There remains a lack of demand for new housing and commercial developments, and until this situation changes, the general outlook for the construction industry remains flat.’
The outlook for the retail sector ‘remains challenging’.
Mr Bell said that like in the UK, retailers were fighting against competition from the internet, as well as a lack of consumer confidence and willingness to spend in the current economic climate.
Despite investment in Strand Street, in Douglas, Mr Bell said there was concern over the increasing number of empty shops.
Read the report at www.gov.im/lib/docs/cso/q2economicreport2013.pdf