October 15, 2012

The economy of the U.S. Virgin Islands returned to growth in 2010, expanding 2.9 percent, according to new data from the Bureau of Economic Analysis (BEA). The growth in real gross domestic product (GDP) largely reflected increases in the trade surplus, government spending, and construction.

GDP offers the most comprehensive picture of the territory’s economy. Although more timely indicators like employment, wages, and visitor arrivals are available, GDP looks at all aspects of the U.S. Virgin Islands’ economy, including prices, output, consumer spending, and trade.

For the first time, BEA calculated estimates of GDP by industry, compensation by industry, and detailed consumer spending for the territory. BEA also revised previous estimates for 2002 to 2009.

The 2.9 percent gain in 2010 followed a 5.9 percent decrease in 2009 and marked the first increase in economic activity since 2007. The island’s 2010 growth rate compares with 2.4 percent growth for the United States as a whole for the same period.

The oil refining industry continued to play a major role in the territory’s economy and accounted for the vast majority of imports and exports of goods. The territory’s expanded trade surplus contributed over 10 percentage points to overall GDP growth.

Imports declined more than exports, expanding the trade surplus. Exports add to GDP, while imports subtract from it. The increase in the trade surplus was partially offset by a decrease in private inventories, which subtracted 9 percentage points from overall GDP growth.

Real consumer spending in the U.S. Virgin Islands expanded 0.4 percent in 2010, driven largely by increases in health care services and “other” services, while spending on goods—especially durable goods—declined.

GDP by industry and compensation by industry
Taken together, private industries added 2.77 percentage points to overall growth in 2010, while government contributed 0.15 percentage point.

Services-producing industries were the primary source of overall growth in 2010. They contributed 3.52 percentage points to economic growth in 2010, the new estimates show. A decline in goods-producing industries largely reflected a decline in the oil refining industry.

The accommodations and amusement industry, including hotel and food services—along with other tourism-related services—continued to decline.

BEA plans to release estimates for 2011 in the spring of 2013. You can read the latest news release and tables here.