The Isle of Man’s Growth and Diversity recognised by Sovereign Credit Agency
‘The Isle of Man is still punching above it weight’, according to the lead director of Cavendish Trust, who reports on recent good news for the small Island economy.
‘On the 27 September 2016 Moody’s announced that the Isle of Man’s (IOM) sovereign credit rating would remain unchanged at Aa1, and whilst the negative outlook also remains, this is lessened to a large extent by the robust finances and undoubted resilience of the Island’s diverse and growing economy’.
The report also points out that the Isle of Man’s economic growth is stronger and less volatile than that of other offshore centres due to its diversification away from banking towards high growth sectors such as ICT, which Moody’s states helps to balance the relatively small economy.
The Moody’s report was welcomed by out-going Treasury Minister Eddie Teare who went on to announce that the GDP of the Isle of Man reached £4.51 billion in 2014/15 after real growth of 5.0% during the year. According to the Isle of Man Government Economic Affairs unit of the Cabinet Office, this was the 32nd successive year of growth for the Island’s economy.
The main growth has come from the IOM’s prosperous e-Gaming sector and traditional Insurance business growing by 22% and 7% respectively in real terms. E-Gaming remains the largest economic sector at 19.5%, followed by Insurance on 14.9%.
The biggest turnaround has been reported by the Island’s Tourist Accommodation sector which has reported growth of an astounding 80% compared to 2013/14.
‘The Government is fortunate, thanks to its long-standing policy of not being able to budget for a deficit which means that has no outstanding debt’. Something that only one other jurisdiction rated by Moody’s can boast: Macao (Aa3 negative). This, coupled with a Reserve Fund of around 40% of GDP, gave sufficient confidence to Moody’s to keep the small nations Sovereign Credit Rating unchanged.
However, the close and somewhat inextricable links with the UK (which also has an Aa1 negative rating) and the impending Brexit, will be a challenge that will likely have an impact on the Island’s future economy.
Despite the Brexit uncertainties, the IOM’s out-look for economic growth remains positive with the forecast for the next 2 years being growth in the region of 3% per annum.
Moody’s report, entitled “Government of Isle of Man — Aa1 Negative: Annual Credit Analysis,” is available on www.moodys.com.