The Isle of Man’s economy has suffered a 5% contraction in real Gross Domestic Product (GDP) for the 2022/23 fiscal year despite a nominal growth of 3.6%. The downturn, driven by inflationary pressures, highlights structural and sector-specific challenges, as revealed by the latest National Income Report from Statistics Isle of Man.
While the Island’s nominal GDP rose from £5.6 billion to £5.8 billion, adjusted for inflation, the real-terms decline signals deeper economic concerns. This economic decline marks a significant reversal from the 3.4% real-terms growth in 2021/22. It echoes previous economic volatility experienced in recent years, including the -8% contraction seen during the global pandemic in 2020/21.
Sectoral Performance: Winners and Losers
The insurance sector remains the most significant contributor to the Manx economy, representing 18.6% of GDP, despite a 6% real-terms contraction. Other key financial services, including eGaming and professional services, have also struggled, with eGaming declining by a sharp 17%. Construction, a vital sector for local infrastructure, recorded a dramatic 24% drop, indicating a slowdown in public and private development projects.
Conversely, several industries demonstrated resilience and recovery. The banking sector grew by an impressive 28% in real terms, while the Information and Communication Technology (ICT) sector surged by 44%, reflecting global demand for digital services. The tourism-related industries showed promise, with tourist accommodation expanding by 34%, as visitor numbers likely recovered post-pandemic.
Key Economic Indicators
- Gross National Product (GNP) fell by 2.6% in real terms, despite a 6.3% nominal increase.
- Company income continues to dominate the economy, accounting for 63.4% of GDP, up from 61.1% the previous year.
- Personal income declined marginally, reflecting pressures on household earnings amidst rising costs.
Policy Implications and Economic Outlook
These results suggest the need for widespread reform to enable future prosperity. Diversifying the economy and investing in high-growth industries like ICT may also prove critical to stabilising long-term growth.
Public Commentary
Leading Manx economist John Webster, commented:
Source Documents
UPDATE: This report was updated shortly after publication on 5 Feb 2025 to embed the comment from John Webster.