Island Analysis: 2013 Q1 Island Monitor Report

The first of four 2013 Island Monitor Reports covering 14 of the 100 islands monitored by Island Analysis. This Report focuses on government income and expenditure trends in the Bahamas, Barbados, Bermuda, Cayman Islands, Cyprus, Guernsey, Hong Kong, Iceland, Isle of Man, Jersey, Malta, Mauritius, Singapore and Tasmania. The report contains a wide range of data sets, graphs and commentary on island trends. 

Notable trends from the first quarter Report are as follows:

• A number of islands have to resort to borrowing in order to bridge the shortfall between income and expenditure. As a result, debt as a percentage of GDP is increasing in these islands. 
• Some islands (e.g. Malta and Mauritius) are investing extensively in innovative projects which will help to diversify their economic base in the medium to long term. This is seen as an essential strategy even though, in a number of cases, it requires borrowing.
• Public expectations are demanding ever better public services (primarily in health and education) but, at the same time, island residents want to see reductions in public expenditure.
• External threats such as tax transparency, regulation, internet shopping, competition from locations which can offer a cheaper labour supply and better market access are all increasing the pressure on islands to broaden their economic base.
• This, in turn, also requires an island government to have a broad balance of direct and indirect revenue sources so that there is less reliance on only one or two sources which could be adversely affected by a changing economic profile and performance.
• The cost of capital projects in the islands covered by the Island Monitor is averaging at 3% of GDP. However, some islands are spending twice this percentage level on infrastructure.
• The development of Public Private Partnership arrangements in the provision of services and facilities (particularly in health) is a growing trend in many island communities as access to public funding decreases.
• With the economic, social and political turbulence being experienced by various islands (and possibly still to be experienced by others), island jurisdictions have to remain fully abreast of challenges, potential solutions and initiatives being addressed by islands around the world. 
• Increasing unemployment levels are placing further pressure on public sector funding in terms of benefits and loss of taxation revenue.

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