ST THOMAS, USVI -- The Bureau of Economic Analysis (BEA), a US Department of Commerce agency responsible for estimating the US gross domestic product (GDP), presented the 2010 US Virgin Islands GDP, the total value of goods and services produced by the USVI economy, to Governor John de Jongh and senior government officials on Monday.
The federal Bureau of Economic Analysis is working with the US Virgin Islands Bureau of Economic Research (BER) to improve the coverage of economic information for future estimates. In addition, BEA estimated territorial GDP by industry, compensation by industry, and produced detailed consumer spending for the first time.
BEA provides the territorial GDP estimates from funding provided by the Office of Insular Affairs of the US Department of the Interior. BEA estimated the USVI grew by 2.9 percent, on an annual basis, in 2010 from 2009, totaling over $4.6 billion in real GDP, GDP adjusted to exclude price changes, reflecting growth in the territory’s international trade balance and private fixed investment which includes new construction and private inventories.
During the territorial GDP presentation, the governor noted the economic impact of HOVENSA, tourism and private construction which were addressed by BEA staff. In regards to the HOVENSA, while both petroleum imports and exports declined in 2010 from 2009, the company exported more from its existing inventories rather than refine additional product. In regards to tourism, BEA noted the economic contribution of tourism, consisting of the Food Services and Accommodations industry, has declined since 2006 as Health Care services have improved.
Government officials noted that tourism in the USVI includes more than food services and accommodations and BER will be working with BEA to improve the measurement of tourism with the results of the ongoing visitor exit survey and other information.
De Jongh informed BEA staff that new construction at the Diageo and Cruzan rum distilleries were public private partnerships rather than solely private construction. BEA classified new construction performed at both rum distilleries were performed by the private contractors and, based on national income accounting concepts and methodologies which defines the structure of the economy, were included in the private sector.
Improvements in both heath care and other services, which include communications, recreation, business, and personal services, were discussed along with the decline in the durable goods industry. It should be noted, as HOVENSA reduced its imports and utilized its existing inventories, the company’s overall economic contribution to GDP declined in 2010 as the other sectors of the USVI economy continued to grow in 2010.
BEA noted the annual growth in real territorial GDP for 2010 was 2.9 percent, which was larger than the 2.4 percent change estimated for the US excluding the territories. While the 2010 growth in real GDP for the USVI was significant, the economic impact of the global recession had a greater impact on the territory. For 2007, the annual growth in TGDP for Virgin Islands was also higher than that of the US -- 2.3 percent to 1.9 respectively -- but in 2008 real GDP declined by 0.4 percent and by 5.9 percent for 2009. During the same time, growth in real GDP for the US economy declined by 0.3 percent in 2008 followed by a larger decline of 3.1 percent in 2009. While the economy of the USVI improved in 2010, the overall impact of HOVENSA was significant.
BER is continuing conversations with BEA and Interior Department staff to coordinate the combined efforts to improve the estimation of the Territorial GDP accelerate the estimation process and incorporate economic information from the upcoming 2012 Economic Census. The 2012 Economic Census, conducted across the country every five years by the US Department of Commerce, will provide local and national policymakers with a detailed picture of the territory’s economy and current business environment.
Information from the 2012 Economic Census will be used to assess the economic impact of the closure of the HOVENSA oil refinery. The results the survey will be useful to government and private-sector leaders trying to rebuild a strong economy in the USVI. In addition, the information collected from the census will be used to improve the calculation of territorial GDP for 2012.