42
CDB Annual Economic Review 2006 Cayman Islands
1. RECENT ECONOMIC PERFORMANCE
A. Overview
The
robust economic performance
fueled by
reconstruction in the aftermath of hurricane Ivan
continued into 2006, with growth tentatively estimated
at 4.6%, down from 6.5% in 2005. The strength of
construction was strongly supported by a rebound in
tourism. The fi nancial services industry also performed
well, with registration of mutual funds continuing
to grow rapidly. The stock exchange also showed
strength. Prices stabilised during the year following
sharp increases in 2005, and the unemployment rate
fell to 2.6%.
B. Sectoral Performance
Financial Services The fi nancial services industry largely
maintained its growth momentum in 2006 despite a
small decline in the number of bank and trust licences.
In the 11 months to November, the number of mutual
funds registered continued to rise steadily, reaching
8,088, up from 6,888 at the end of November 2005. This
represented a net increase of 17% in registrations within
that category over the period.
The insurance sub-sector continued to be buoyed by
conditions in the external market, in particular the steep
increase in rates by traditional commercial insurance
companies following 9/11. The sub-sector’s growing
success was also facilitated by a good reputation for
management oversight and regulation. The number
of companies issued licences to provide insurance
services rose to 884 at the end of November 2006, up
2.7% from the year-earlier period. Of the total, 732 (723
in November 2005) were registered to conduct offshore
business only, while the number of providers with
domestic licences stood at 27. Over the same period,
the number of licences issued to insurance agents
increased by 24.6%.
The ongoing consolidation within the banking industry
continued to affect