BVI News

REPORT: Territory’s GDP to decline 13 to 17 percent this year

Premier Andrew Fahie

A report from the United Nations Development Programme (UNDP) has shown that the COVID-19 pandemic will cause a major shrink in the territory’s Gross Domestic Product (GDP) this year.

GDP is the total value of goods and services (economic output) provided in a country each year.

Disclosing some of the findings of the UNDP’s HEAT Report for the BVI this week, Premier Andrew said the impact was mostly felt in the territory’s tourism sector, which accounts for roughly a third of GDP.

“This has resulted in a considerable slowdown in business activity in the tourism industry itself and related industries, which in turn has induced a dramatic spike in unemployment and social dislocations. The HEAT Report projects a GDP decline of 13 percent to 17 percent in 2020, given the current prevailing conditions in the tourism sector,” Fahie said while speaking at the launch ceremony for the report.

This major percentage decline in GDP may very well see a smaller-than-usual budget for the upcoming fiscal year.

The 2021 budget is expected to be announced next month.

In the meantime, Fahie said the purpose of the HEAT Report is to ‘paint a picture’ of the virus’ impact on the BVI society, taking into account its initial spread to our islands and the wider Caribbean region.

“The HEAT Report has helped to guide my government’s COVID-19 response and remains a reference point as we fine-tune our policy prescriptions to drive our recovery from the global pandemic,” Fahie stated.

Fahie said government will make the full report public soon.

 

 

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8 Comments

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  1. SMH says:

    Pure pandering and fear mongering. We need to know URGENTLY the current financial state of the BVI and the way forward. This is no longer about NDP, VIP or any other P, all of us have a lot at stake and we need to start behaving like grown ups that actually care about the BVI.

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  2. E. Leonard says:

    In addition to the VI being a small, resource-poor, disaster-prone…….etc locale, one of its vulnerabilities and disadvantages is that it is susceptible to external economic shocks. Covid-19, a deadly and contagious disease and one of the largest public health crisis in 100 years, have impacted the globe. It has ravaged lives and livelihoods across the globe, including the VI. Further, it has impacted the economy of VI trading partners, ie, US, UK, Europe, China……..etc. It has hit tourism particularly hard.

    Tourism makes up 50% of the VI’s economic twin pillars(financial services the other half), contributing 33% to the territory’s GDP. It provides significant direct, indirect and induced employment. However, since early spring, the VI borders had to be shutdown to prevent and contain Covid-19. This action completely shutdown tourism that impacted employment, government revenue, service delivery, business operations and GDP contribution.

    Moreover, the US, the major source of VI visitors, economy was blistered by Covid-19. Though its economy grew a record breaking 33.1% annualized rate last quarter (July-September), the number though positive is not robust, for its economy is wobbly. In the previous quarter, growth tumbled approximately 31%. As a result, Covid-19 spending drove up the US deficit and debt. And for the first time since perhaps 1946, in 2020/2021, its debt is going to equal to or surpass its GDP. Further, Covid-19 cases are spiking in the US that will further impact its wobbly economy and will have repercussions for the VI economy. What can the VI do weather this Covid-19 storm?

    Undoubtedly, Covid-19 will continue to impact lives and livelihoods in the VI. There is a news feed on this site by the Hon V. Wheatley suggesting another stimulus package may be needed. This indeed may be needed. But it will probably be a challenge for government. Government revenue may be down and not too sure it has the cash reserve to meet this demand. What can it do? Experts suggest that a prudent debt to GDP ratio for developing countries is approximately 40% (can temporarily go higher in an emergency). The MoF can provide the current debt to GDP ratio but assume it much less than 40%.

    That said, the VI may have to borrow to deal with this current crisis. And as the territory emerges on the other side Covid-19, a Covid-19 loan repayment tax/fee may need to be put in place.

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    • @E. Leonard says:

      In Anguilla, they say ah yu lawd! Boi, mehson, yu wafu kill we wid taxes. We pay land, house, NHI, social security….,.etc. we need some relief, not more pain. These are tough times and in time like these we need government to make our lives easier. See things from Main Street level. Nuff respect though.

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  3. Local BVISLANDER says:

    @SHM, you and who living in your fantasy world? Care for here? Locals? The expats and down island people whom we love to run and called down has more love for here than most BVISLANDERS and that’s a damn fact. Chew on that.

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  4. Seriously says:

    First, there is no way that the drop in the GDP will only be 17%. I’m sure it’s more around the 30% mark which makes the financial situation in the Territory dire. Either extremely large sums of money need to be borrowed or at the current state there will be a complete collapse of the Territory. There are really 2 issues at hand. First is, there seems to be a consensus of the government that if there are checks in the checkbook there must be money in the bank. Second, there needs to be an injection of people into the government that don’t need to take their socks off to do higher math. In closing, the Territory is near total collapse but the population will only find out when it’s too late.

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  5. Doh says:

    So this is the UN report. Since the BVI doesn’t regularly disclose accurate financials due to shady offshoring, we can easily estimate that this number is double.

    So a 34% decline is more in line with projections. Add in the total collapse of the tourism sector by Covid and Dear Leader and it makes perfect sense.

    That’s a hole that is very difficult to climb out of.

    Carry on

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  6. Albion says:

    As bad as that sounds, it is probably good news in relative terms. The UK and US have seen their economies contract by around 30%, so 13-17% is a much smaller drop.

  7. Earl says:

    Is the Government purposely trying to drag down the GDP so it can once again put its begging hand out to the UK ?
    We all know the BVI cannot get much assistance or Grants as we are in theory “too wealthy ” to qualify to be able to suck Mother UKs nipple !

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