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Bermuda - Economy

Bermuda’s per capita gross domestic product (GDP) was US$86,875 in 2009, one of the highest in the world. Its real GDP grew by an estimated 33% between 2000 and 2008, but the economy underwent a general downturn during the global recession. Real GDP fell from US$ 4.2 billion in 2008 to US$ 3.8 billion in 2009, and per capita GDP fell by 6.3% in that period.

Since switching from the Bermuda pound in 1970, Bermuda's currency has been the Bermudian dollar, which is pegged to the US dollar. US notes and coins are used interchangeably with Bermudian notes and coins within the islands for most practical purposes; however, banks levy a small exchange rate for the purchase of US dollars with Bermudian dollars. Bermudian notes carry the image of HM Queen Elizabeth II. The Bermuda Monetary Authority is the issuing authority for all banknotes and coins, as well as being responsible for the regulation of financial institutions. There is a permanent exhibition of Bermuda notes and coins at the Royal Naval Dockyard Museum.

The affordability of housing has become a prominent issue over the past few years. The CIA World Factbook lists the average cost of a house in June 2003 as $976,000, while real estate agencies have claimed that this figure had risen to $1.6 million by 2006, and to $1.845 million by early 2007, though such high figures have been disputed.

Bermuda is an Offshore financial centre, which results from its low direct taxation on personal or corporate income. The local tax system is based upon import duties, payroll taxes and consumption taxes. The legal system is derived from that of the United Kingdom, with recourse to English courts of final appeal.

As the offshore domicile of many foreign companies, Bermuda has a highly-developed international business economy; it is a financial exporter of financial services, primarily insurance, reinsurance, investment funds and special purpose vehicles (SPV). Finance and international business now constitute the largest sector of Bermuda's economy.

Large numbers of leading international insurance companies are based in Bermuda making the territory one of the world's largest reinsurance centres. Those internationally owned and operated businesses that are physically based in Bermuda - of which there are around four hundred - are represented by the Association of Bermuda International Companies (ABIC). In total, over 1,500 exempted or international companies are currently registered with the Registrar of Companies in Bermuda.

Tourism is Bermuda's second largest industry, with the island attracting over one-half million visitors annually, of whom more than 80% are from the United States. Other significant sources of visitors are from Canada and the United Kingdom. Tourists arrive either by cruise ship or by air at Bermuda International Airport, the only airport on the island.