The Cayman Islands economy has continued to grow at a steady pace since its economic recovery began in 2011.
Goods and Prices
The vast majority of the country's locally consumed goods are imported and most of this comes from the US as the primary trading partner. As a result of this and the nature of the country's monetary system, inflation rates in the Cayman Islands tend to track closely with that of the US. Similar to many countries around the world in the recent global economic climate, the Cayman Islands has experienced a slight increase in prices over the past year and experienced deflation in 2015.
Labour and Employment
The Cayman Islands economy is labour intensive. Due to its relatively small population and the impressive economic growth over the past four decades, the Cayman Islands relies heavily on imported labour to meet the skilled and unskilled human capital requirements for sustaining the economy. Imported labour comprises just over 50% of the entire labour force. This is likely to remain a key feature of the economy for the foreseeable future given the relatively small population.
The unemployment rate in the country has declined significantly from 6.1% in 2013 to 4.2% in 2016, reflecting a steady improvement in economic conditions over the past few years.
Taxes and Fiscal Stability
There are no direct personal income, corporate or property taxes in the Cayman Islands. The government relies on a system of indirect taxation focused primarily in the following areas:
- Banks, trust, insurance, company and mutual funds fees
- Land or property transfer fees
- Work permits
- Travel and cruise ship taxes
- Tourist accommodations taxes
- Business licences
- Customs and import duties
Real GDP grew by 2.8% in 2016, which is a slight increase compared to the 2% growth in 2015. The government expects growth in the medium term to be driven by the construction and tourism sectors, as well as stable growth in financial services
The main economic sectors are financial services and tourism. Various economic impact studies puts the financial services sector at approximately 50 to 60% of GDP, while the tourism sector contributes between 25 to 30% of GDP. Other sectors include construction, real estate and other business activities.
Like many of the smaller islands in the Caribbean, the Cayman Islands economy is a service based economy. The natural resources of the Cayman Islands have not enabled it to pursue traditional industrial development. Historically the economy was relatively small until four decades ago when the country began to pursue tourism and financial services as a path to economic development.
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