For the first time in five years, the territory’s gross domestic product, measuring the overall economic activity or the value of goods and services, has increased, driven by growth in the tourism industry and consumer spending, according to a new federal government report.
Analyses released by the U.S. Bureau of Analysis (BEA) have previously shown 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 last year that 2014’s decline of 1 percent (which was recently revised based in new information from the U.S. Census Bureau) did reflect some growth even though GDP was still down.
But for the first time Wednesday, there was good news.
“The numbers show that the population of goods and services in the V.I. economy was positive for the first time in five years,” BEA Director Brian Moyer said at during a press conference held on St. Thomas to discuss the numbers. “The economy expanded in 2015,” he said.
According to the numbers, the local GDP grew 0.2 percent during 2015, which BEA analyst Kevin Furlong attributed to a 3.1 percent rise in tourism and to the rise in exports of services, which is up 1.3 percent.
“The first time that consumer spending increased was in 2010,” Furlong said. “This increase in 2015 is supported by an increase in wages and a decrease in fuel prices, which freed up more money for spending.”
Interestingly, Furlong said that along with a decrease in oil shipments, one major offsetting factor – which does not positively contribute to economic growth – was a 4 percent decline in government spending, or investment activity, due to the completion of the V.I. Next Generation Network’s territorywide broadband initiative.
Bureau of Analysis officials said that other than viNGN, they could not offer any further analysis of government spending in 2015 but explained that the GDP number does include information taken from the government’s audited financial statements, purchases by the government in goods, services and other investments, along with compensation for government employees, among other things.
Whether the numbers also included government spending outside the territory, debt or outstanding bills was not clear.
When asked if reporters could access that specific breakdown, BEA officials said no, but they explained that the GDP is not the only measure of economic activity within a country or territory and can be paired with other performance factors to give a complete economic picture.
“GDP measures the economic activity of a country or territory and is used to gauge the economic performance,” Moyer said. “That tells us something about the resources that are being used to produce goods and services within that country or territory.” But analysists can also use a variety of indicators, including GDP, the unemployment or employment rate, and the consumer price index, which can be combined and used as a gauge for overall economic performance, Moyer added.