V.I. GDP drops 5.4 percent from 2012 to 2013
Published: August 20, 2014
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ST. THOMAS - The territory's 2013 Gross Domestic Product was released Tuesday, showing an overall drop by 5.4 percent compared with 2012.
The drop is less of a decrease than the year before, when the GDP fell by 13 percent compared with the prior year.
The main source of the decline continues to be HOVENSA's closure in early 2012, according to government officials.
"The petroleum refining is the big driver in the numbers," Bureau of Economic Analysis Acting Director Brian Moyer said Tuesday.
If the oil refinery was not a factor, the territory would have seen a 0.6 percent growth, he said.
The territory's Gross Domestic Product, sometimes referred to locally as the Gross Territorial Product, is the value of goods and services that any economy produces at any given time.
To determine the GDP, economists look at many different sectors, such as consumption; imports and exports; taxes; government spending; and corporate and personal income levels.
The GDP for the territory is called the "real GDP" because it is adjusted to remove price changes. The U.S. Bureau of Economic Analysis calculates the Gross Domestic Product for the U.S. Virgin Islands, and officials from the federal agency are in the territory this week to detail the GDP results with government officials and the public.
The territory's total GDP for 2013 is $3.79 billion, down 5.4 percent from $4.14 billion in 2012.
By comparison, the national GDP - which does not include data from the U.S. territories - grew by 2.2 percent in 2013, according to Moyer.
The decline in the territory's GDP is attributed to two things, the drop in refined oil exports after the closure of HOVENSA and a reduction in consumer spending in the territory, Moyer said.
"If you remember, it was a difficult year for consumers," he told The Daily News. "Compensation fell, but consumers faced higher prices."
The report did contain some good news: Moyer said 2013 showed positive growth in the areas of tourism and rum production.
In 2013, visitor arrivals increased 2.2 percent and rum exports increased 22 percent, which helped keep the GDP from falling more, he said.
"That is a bright spot," Moyer said.
The report also shows a 3.6 percent drop in government spending, partly because of the government's tighter budget constraints, but mostly because the federal stimulus funding awarded to the territory in 2009 has ended.
V.I. Bureau of Economic Research Director Wharton Berger said the report demonstrates just how much the territory's economy has changed in recent years.
"Things have changed. The economy has changed. We are relying more on the private sector," he said. "The government would like to work more with the private sector to facilitate growth here in the territory."
Revisions to past GDP
The 2013 GDP report included revisions to the 2010, 2011 and 2012 reports. The revisions were made using updated data sources, including revised gross business receipts from the V.I. Bureau of Internal Revenue, new territorial spending reports from the V.I. government and results from the 2012-2013 visitor exit survey.
The revisions are very close to the preliminary data, according to Bureau of Economic Analysis Project Manager Aya Hamano.
"The story hasn't changed," she said.
In 2011 and 2012, the territory's GDP dropped significantly, reflecting the recession and the closure of the HOVENSA refinery.
The Bureau of Economic Analysis is about to embark on a revision of data from the last five years, now that the U.S. Census Bureau's 2012 Economic Census of Island Areas report was released last month.
"Over the next year, we're going to do a comprehensive revision to these statistics," Moyer said. "We'll bring in new data sources, the economic census, and open it up to revisions. Next year at this time, we'll roll out a revised set of statistics."
The Interior Department's Office of Insular Affairs has entered into an agreement with the Bureau of Economic Analysis to update the GDP estimates going back to 2002. The bureau will use new reports from the U.S. Census Bureau and updates from the federal and local governments.
The 2014 GDP report will be released next year at the same time, Moyer said.
For more information go to www.bea.gov.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.U.S. Virgin Islands Gross Domestic Product (in billions)
2007 2008 2009 2010 2011 2012 2013
$4.85 $4.26 $4.26 $4.40 $4.28 $4.14 $3.79