Following the release of the first estimates of Guernsey’s 2022 GDP, Richard Hemans, the lead on economic matters for the IoD Guernsey Branch commented: ‘Guernsey’s economy grew strongly again in 2022, increasing in real terms by 4% year on year following the significant increase of 7% in 2021 after the large contraction of 7% during the first year of the Covid-19 pandemic. Guernsey’s economy is now 3.5% larger than 2019, which is positive although lower than Jersey’s growth of 5%. It seems that Jersey had a steeper decline during the pandemic but is recovering more robustly.
‘GDP per capita grew by 3%, which demonstrates that productivity continues to improve and is broadly in line with population growth. Real GDP growth has averaged 1% per annum over the last decade, which is similar to the UK.
‘The island’s GDP per capita is now the highest it has been in the last decade and has grown strongly since the pandemic, which means that living standards have improved.
‘This year’s GDP bulletin sees a change in the methodology of calculating company profits based on the annual economic activity return, which should give a more accurate record of GDP. Company profits grew strongly again in 2022 after falling heavily in the pandemic, rising by 12% in real terms compared with 1% for employee compensation. Strong corporate profits bode well for business investment although weak employee compensation will hold back consumer spending.
‘The bulletin highlights again that finance and professional services dominate the economy, directly representing more than 45% of the island’s GDP. Finance and professional services increased by 14% thanks to strong growth across the board, but particularly in banking and insurance. These impressive increases highlight how important these sectors are in driving the economy and supporting the island when other large sectors experience difficulties such as retail and wholesale, which have dropped by 10%.
‘The economy enjoyed good growth in 2022, but it is likely that growth will have moderated further in 2023 due to rising interest rates, high inflation and the bleak geopolitical conditions. Whilst many are forecasting a soft landing for the global economy in 2024, the subdued economic performance of our main trading partner (the UK), a complex political and regulatory backdrop, stubborn inflation and elevated interest rates mean that the outlook for 2024 GDP growth is muted at best.’