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Virgin Islands’ Economy Shrinks in 2014

Virgin Island beach.jpg

The Virgin Islands economy continued to contract in 2014, although at a much slower rate than in the previous three years, the U.S. Bureau of Economic Analysis reported today.

The estimates of Gross Domestic Product for the U.S. Virgin Islands show that real GDP —  adjusted to remove price changes — decreased 0.6 percent in 2014. For comparison, real GDP for the U.S. (excluding the territories) increased 2.4 percent in 2014.

The decline in the Virgin Islands economy primarily reflected a decrease in government spending.  That decrease reflected declines in compensation paid to federal government employees and in federal government construction activity.

Exports of goods increased significantly, primarily due to growth in exports of petroleum and petroleum products. However, this growth was mostly offset by growth in imports of petroleum — a subtraction item in the calculation of GDP — and by a drawdown of inventories.

Exports of services, which consists primarily of spending by tourists, contributed positively to the economy. Growth in tourism reflected an increase in visitor arrivals of 4.2 percent.

In 2013, the Virgin Islands’ economy contracted by 5.3 percent. That followed a 15 percent decline in 2012 and an 8.2 percent decrease in 2011.

Travel and Tourism Spending Decelerated in the Third Quarter of 2015

Real spending (output) on travel and tourism decelerated in the third quarter of 2015, increasing at an annual rate of 4.3 percent after increasing 8.4 percent (revised) in the second quarter of 2015. Real gross domestic product (GDP) also decelerated, increasing 2.1 percent (second estimate) in the third quarter after increasing 3.9 percent.

The leading contributors to the deceleration in the third quarter were “traveler accommodations” and “recreation and entertainment.” Real spending on “traveler accommodations” decelerated, increasing 4.0 percent in the third quarter after increasing 13.5 percent (revised) in the second quarter. Real spending on “recreation and entertainment” turned down, declining 8.1 percent, after increasing 5.6 percent in the previous quarter.

Real Tourism Spending 1216

Tourism Prices. Price growth for travel and tourism goods and services turned down in the third quarter of 2015, decreasing 0.3 percent following an increase of 0.5 percent (revised) in the second quarter.  The downturn was mainly attributable to a downturn in “all other transportation-related commodities,” which includes gasoline, travel arrangements and reservation services, and automotive rental. This commodity group decreased 0.2 percent after increasing 14.4 percent in the second quarter. Prices for “traveler accommodations” turned up in the third quarter, partially offsetting the downturn in prices for “all other transportation-related commodities.”
Tourism Prices 1216

For more information, read the full report.