The States of Guernsey has published its latest Economic and Financial Stability Overview, which highlights an increase in its workforce and GDP, driven primarily by the finance sector and professional services and supported by a small growth in the population.
The data shows that GDP (a measure of the total size of the island's economy) continued to grow in real terms in 2018 by 1.7%. The growth in GDP in 2016 and 2017 has also been revised up to 3% and 4.6% respectively as more data has become available.
Secondary economic indicators, such as employment and earnings, suggest GDP continued to grow in real terms through 2019 but that, when official estimates are published in the summer, they may show a slower rate of growth than the three previous years.
Both UK and global growth rates are expected to be slightly less strong in 2020, and this should reflect positively on economic conditions in Guernsey as the year progresses.
Population growth
The population has begun to grow after several years of decline. Annual population growth rates accelerated at the end of 2018 as a result of fewer people moving away from the island, but the total size of the population is about 240 people less than at its peak in 2011.
Conditions in the property market have stabilised. The total number of local market properties sold in the year has increased and there have been slight real increases in Local Market house prices in the third quarter of 2019 compared with a year earlier.
Prices remain significantly lower in real terms that at their peak in 2013, which has meant buying and renting property in Guernsey has become more affordable. While still expensive relative to UK averages, the ratio of the average purchase price of a property to median earnings has fallen from 15.2 in 2013 to 12.6.
Median earnings have increased in real terms by 0.9%, with Guernsey's low unemployment levels meaning there is demand and competition for workers.
There is substanial variation in median earnings – the finance sector, for example, has median earnings of £46,400, significantly higher than the median for the economy as a whole.
The overall participation rate – a measure of those who are economically active – remains strong at 78%.
Finance employment
Employment in the finance sector continued to grow year on year to June 2019, as did employment in professional and business services and information and communications. The finance sector remains the largest sector in terms of private sector employment, employing 19.2% of the workforce.
However, employment in more domestically focused sectors such as construction and retail declined slightly over the same period.
Deputy Gavin St Pier (pictured), President of the Policy & Resources Committee, said: "There are a lot of positive signs for our economy, and the growth in GDP and islanders' earnings are welcome. The small increase in our population size is also a good sign.
"This performance doesn't just happen but is a result of years of effort and discipline and the maintenance of stability. However, we cannot take this for granted. As a small, open economy, we remain more vulnerable than large economies, so there is no room for complacency."
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