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A VIEW BEYOND THE HORIZON

KINISHA FORBES PATLIAN JOHNSON

Economic Outlook Of The Virgin Islands: How The New Government Plans To Manage Risks And Harness Opportunities The Virgin Islands’ economy has fared better than anticipated in the wake of 2017’s devastating storms. In 2018, a resilient financial services sector, recovering tourism industry, and booming construction projects combined to buttress economic growth in the Territory. The Government has projected constant Gross Domestic Product (GDP) growth at 2.3 percent in 2018, following a 3.7 percent decline in 2017 (Table 1). This momentum of positive growth will now need to be built upon in propelling the Territory to achieving sustainability beyond recovery.

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JULY 2019

POSITIVE PROSPECTS FOR SUSTAINABLE GROWTH

VIP PLANS TO PRIORITISE PEOPLE’S PROGRESS

The specific features of our economic outlook can be outlined by examining three indicators: the relative size of the economy, movement in consumer prices, and the number of persons employed. Medium-term annual economic growth from 2019 to 2021 is expected to fall between 2 and 3 percent annually, reliant on our ability to strategically manage risks. Movement in consumer prices, measured by inflation, has ticked up in the post-hurricane environment, at an estimated 2.1% in 2018, with increased demand for goods and services used for recovery. While inflation is an expected by-product of growth, public sector efforts to contain costs can help in constraining inflation, as the Government is a major consumer of goods and services in the economy. High levels of inflation threaten living standards, where prices push goods and services out of people’s reach.

The main role of public sector efforts must be advancing the wellbeing of people. This is achieved by facilitating widely-shared economic growth, which secures a good quality of life for all; regulating certain activities to ensure that the public interest is protected and advanced; and caring for the most vulnerable. Given that people are central to public policy, the size of the economy, the relative level of prices, and employment numbers are relevant only insomuch as they inform on the status of people’s lives.

Employment in construction since the hurricanes has risen noticeably, cushioning declines in the number of persons employed in the tourism sector. While official employment statistics for 2017/18 are not yet available, growth projections suggest that employment in the construction sector will continue to be heightened over the next three to four years, and the tourism sector and associated jobs are expected to substantially recover for the 2019/20 tourist season (Tourist arrivals for the first two months of 2019 reached 88.7% of prestorm arrivals – Figure 1). This indicates positive prospects for both job and wage growth in the medium-term.

The newly elected Government administration’s Manifesto outlines its plans under the theme “Restoring Hope and Prosperity for All”. In the current recovery context of the Virgin Islands, the Manifesto states emphatically that people must come before projects. Indeed, any project being implemented to resolve existing problems or take advantage of opportunities is, in summary terms, aimed at improving the standard of living of the Territory’s people. Where we confront our challenges and fully realise emerging opportunities, the economic outlook for the Territory holds significant promise. Analysis of the Manifesto’s initiatives can present a picture of how the Territory’s economy and people will fare, where the Government is able to effectively implement its plans, harness opportunities and address three key risks: the risk of a stalled recovery, the risk to our business model, and the risk of uncertainty.

Profile for Business BVI

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...

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