Economy contracts by just 3% despite Covid battering2 min read
The States said that the publication of first estimates of gross domestic product for 2020 showed that the island’s economy contracted in real terms by 3% in 2020, significantly less than forecast when measures to address the spread of Covid-19 were first implemented.
GDP is an aggregate measure of the total amount of income generated by individuals and businesses, with the island’s total GDP for 2020 estimated at £3.178bn.
Sectors most impacted by travel restrictions were hardest hit, with a 33% contraction in the hostelry sector and 22% in the transport and storage sector in 2020.
The reported contraction in Guernsey’s largest sector, financial services, was smaller at 2%.
Meanwhile, real growth was reported in information and communication (4%) and real estate activities (3%).
The household sector also contributed 3% more than in 2019, due to increasing market values of accommodation.
‘The publication of first estimates of GDP confirms the message in the Budget that Guernsey’s response to Covid-19 has helped to mitigate the economic impacts of the pandemic,’ said Mark Helyar, treasury lead for the Policy & Resources Committee.
‘A 3% contraction in our economy, considered in the context of the unprecedented level of disruption the pandemic has caused and relative to contractions in excess of 9% reported in our near neighbours during 2020, is a particularly positive result.
‘While we continue to offer support to parts of our hostelry and transport sectors, current indications are that Guernsey will have recovered most, if not all, of this activity during 2021 and continuing into 2022.’
But Deputy Helyar warned that a far greater long-term financial challenge remained that had to addressed.
‘From the point of view of funding public services, including reasonable health and care services for islanders as they get older,
the impact of the pandemic will seem small compared to the funding gap created by our changing demographics.
‘The cost of supporting the Bailiwick through this crisis has only made the need to address these issues more pressing.’