While the local economy continued to “contract” in 2014, U.S. Bureau of Economic Analysis officials said Wednesday there was a positive growth in the overall territorial gross domestic product in comparison to previous years.
The most recent report released by BEA shows large decreases in territorial GDP as far back as 2011, when it declined 8.2 percent, followed by a 15 percent decline in 2012. The numbers improved in 2013 and officials said Wednesday that 2014’s decline of 0.6 percent does reflect some growth even though GDP is still down.
“It is falling, but the rate is improving,” said Simon Jones-Hendrickson, Gov. Kenneth Mapp’s chief economist, during a press conference on St. Thomas to go over the data. “It shows that something is going on all the time, so we see that jump from 15 percent to 0.6 and, all things being equal, I think that the 2015 data will show something significantly different in a positive direction. Looking at the numbers, you will see things are improving,” Jones-Hendrickson said.
The one continued increase in categories contributing to the GDP is in the area of exports, which shows growth of 18.9 percent due mostly to tourism spending.
Brian Moyer, BEA director, said exports in this area could be in the form of hotel services provided to visitors, while Jones-Hendrickson said the growth rate also relates directly to how much money is spent by individuals coming into the territory to enjoy the “the sun, the sand and the sea.”
Growth in tourism reflected an increase in visitor arrivals of 4.2 percent, according to the BEA report.
An increase in the export of petroleum and petroleum products is also factored into the numbers, which Moyer said is offset by an increase in the import of petroleum (as the territory began to bring in its own fuel once Hovensa’s rack shut down) and a drawdown of inventories.
“Once Hovensa moved out, that was a significant blow to the economy and when things are doing poorly, the impacts to the V.I. are almost instantaneous,” Jones-Hendrickson added.
The refinery’s shutdown was primarily responsible for the high decrease in numbers in 2012, and in 2013, the decline in GDP was due mostly to the private sector a decline in “goods-producing industries,” namely the petroleum refining industry, according to the report.
“Total compensation also decreased in 2013; the largest contributor to the decrease was goods-producing industries,” the report said.
According to BEA’s report, the decline to the V.I. economy in 2014 is also due to a decrease in government spending, since less money was being paid to federal government employees and there was less in federal government construction activity.
Asked about the impact that local rum production has had on the numbers, BEA officials said that both the production and importing of rum products had a positive impact on GDP in 2012, but for 2014, the numbers actually declined.
GDP is the measure of goods and services produced within the V.I. economy over a certain period of time; BEA’s report lists the different factors that contribute to the overall GDP and how each sector impacted the overall growth rate. This year’s report also takes into account data collected from the 2012 census report, which Moyer said “contributes greatly to the calculations.”