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Indicators> Economic Indicators> Quarterly Bulletin Fourth Quarter 1997 |
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Quarterly
Bulletin
Volume (3) No. (4) December, 1997 Main
Economic Indicators 1. Inflation Fourth Quarter, 1997 The Consumer price Index (CPI) for the month of December 1997 stood at a 166.6 index level, whereas the previous months (November) stood at 164.2 percent. One quarter earlier the index stood at 163.4. On a half yearly and annual basis the index stood at 162.8 and 161.5 respectively. Insofar as quarterly comparison was concerned the Furniture and Household Supplies and Miscellaneous subgroup were the only two subgroup to decline. Given a percentage of 0.61 percent and 0.46 percent respectively. The other subgroups indicated the following changes: Food, Beverage and Tobacco increase by 0.99 percent, Housing 0.0 percent, Clothing and Footwear 0.31 percent, Transportation 8.90 percent, and Services 2.60 percent.
Inflation Rates
Annual Inflation Rates
Following from the previous quarter, all currencies (except the Canadian dollar) in the pool of key foreign currencies for the British Virgin Islands gained in strength against the US dollar. The table opposite indicates that the ECU, the British Pound and the Japaneese Yen strengthened by 3.1%, 2.4% and 7.8%, respectively. Only the Canadian dollar weakened by 3.2% from its value of $0.76 dollars at end of the second quarter. This weakening of the US dollars against the currencies of our other trading partner will impact negatively on the price of goods and services in our international trade and the meeting of our debt servicing obligations.
Foreign Exchange Rates
Currencies vs United States Dollar
3. Transactions with the Rest of the World The balance on transaction with the Rest of the World summarises for the most part the balance on transactions between Tourism and Financial Services. The combination of a 4.2% expansion in imports of goods and services and an 8.1% rise in imports of goods and services resulted in two-fold increase in overall balances, compared to the fourth quarter one year earlier. During the review quarter, the 4.2% rise of imports to $62.1 mn resulted from an increase of 3.7% in imports of goods and a 6.9% increase in services. On the other hand, exports of $67.6mn were made up of a 19.6% expansion in export of goods to $0.4 mn and an increase of 8.0% in export of services to $67.2mn when compared with the fourth quarter 1997.
Transactions with the Rest of the World
Current Account: Major Components ($'000)
An unchanged prime interest rate of 8.5% no doubt was partially responsible for the 7.9% increase in the broad money supply to $745.5mn and an increase in loans outstanding to $423.4m at the end of the forth quarter. The 7.9% growth in total deposits arose from a 5.9%, 3.7% and 10.7% growth in demand, savings and certificates of deposit, respectively. The - 1990 based index of deposits now stands at 243 up from 226 at the end of the previous quarter. Loans outstanding, used to approximate credit, which has been recently growing faster than total deposits, expanded at a 8.2% rate to reach $423.3mn at the end of the review period. The 1990 - based index of loans outstanding stood at 283 at the end of the fourth quarter.
Money Indicators
Indices of Deposits and Loans
Figures from the Department of Trade and Investment Promotion indicate a 1.4% rise in the number of trade licenses operating at the end of the review period compared with the pervious quarter. Figures also indicate the approval of 36 new licenses. In addition to the licensing of more than one new business every three days on average, there were some 364 licenses renewed during the fourth quarter bringing the index of operating businesses up from 154 to 156. The same index stood at 134 and 148 at the end of the fourth quarters in 1995 and 1996, respectively.
General Business Indicators: Trade Licenses Paid
Quarterly Issue of Trade Licenses
The number of new companies registered for conducting business in the domestic economy out numbered the number of new trade licenses approved. Of course companies maybe registered in advance of obtaining a trade license, and probably not all companies need trade licenses. The number of new licenses approved amounted to 39 compared to 50, 41 and 42 seen during the fourth quarter of 1995, 1996 and the third quarter of 1997, respectively.
General Business
Indicators:
Company Registration
When compared to the third quarter, expenditure and revenue expanded noticeably. However, a comparison of the review period figures with fourth quarter 1996 shows substantial increases only in current revenue and capital expenditure. Department of Treasury figures indicate increases of 16.6% and 16.1% in current revenue and total expenditure, respectively over third quarter 1997 out-turn. An examination of fourth quarter 1996 out-turn suggests 14.9% and 2.8% rises in current revenue and total expenditures. A comparison of current and capital expenditure with fourth quarter 1996 figures shows a 1.0% and a 13.0% growth rate, respectively. A similar comparison with third quarter figures yields growth rates of 12.7% and 35.2%, respectively.
Central Government
Central Government Spending
Expanded activities in the services and households sectors were no doubt responsible for the expected increase observed in the production and consumption of electricity and water during the fourth quarter. Preliminary figures indicate a 3.3% and 2.2% growth for electricity generated and water produced, respectively. Similarly, growth figures for electricity consumed and water used were 2.2% and 2.5%, respectively with the difference between production and consumption being accounted for by internal use and loss during distribution.
Energy: Electricity and Water
Electricity and Water Activity
The number of licensed vehicles during the review quarter jumped 2.6% as a result of a 4.2%, 1.9% and 4.4% increase in transport, private and other vehicles respectively, over the third quarter according to provisional figures. The number of private cars (1,530) amounted to 73.5% of all licensed vehicles with transport vehicles and other vehicles accounting for 9.5% and 17.0%, respectively.
Land Transport
Source: Licencing Department
Motor Vehicles by Type
Provisional figures for number of calls and total call minutes for both domestic and international activities showed growth for the six consecutive quarters. Growth figures, as shown by the 1990 based indicie, indicate total international calls and call minutes up to 161 and 152, respectively while similar domestic indicators were observed at 140 and 176, respectively. Total calls and total call minutes, used to measure both domestic and international activity in aggregate, came in at 175 and 167, respectively, confirming that telecommunications services are vital factors in national economic growth.
Communications
Index of Telephone Calls
The falls in imports of steel and cement relative to the third quarter were connected to inventory adjustments to reduce over estimation of demand, and does represent any substantial down turn in output of the construction sector. A comparison with the fourth quarter 1997 reveals a 2.7% increase in imports of cement to $0.38mn. A similar comparison of fourth quarter imports of steel shows a dramatic fall of 28.3%. The declines arising out of a comparison with the third quarter 1997 figures are even larger.
Construction
Imports of Cement and Steel Bars
Tourist indicates for he review period show a substantial increase over the similar period in 1996. A comparison with third quarter figures re not relevant due to the level of seasonality between the third and forth quarters. Overnight tourist arrivals grew 9.5% to 58,795 compared to the 53,706 seen during the fourth quarter 1996. The number of tourist nights grew 18.3% to 487,999 from 381,313. Similarly, tourism receipt increased 7.9% from $35.4mn to $38.2mn. Cruiseship arrivals amounted to 25,903 as against 38,815 seen during the fourth quarter 1996.
Tourism
Tourist Visitors
13. International Business Companies The number of IBC’s registered during the third quarter amounted to 93.5 percent of those registered during the first quarter 1997, but represented only a 3.9 percent growth over figures seen during the second quarter of 1997. Overall, registration figures for the first three quarters represent an 8.75 percent over companies register during the same period in 1996. This positive performance in the growing number of IBC’s registered brought the index of registered companies and companies incorporated to 307 and 587, respectively.
International Financial Sector
IBC's Registration
14. Economic Performance Summary Review A good combination of domestic activities and better than expected output from international trade in tourism provided for a surprisingly good third quarter. Domestic economic activities benefited from a boost in public sector investment outlays on construction, expanded commercial credit to construction, a slight fall in the annual Consumer Price Index and a mixed performance in the pool of key foreign currencies. The external sector was highlighted by a moderate increase in tourist inflows and expected steady inflows from international financial services. International trade, mainly in tourist and financial services, recorded a drop of 14.3% in the overall balance due mainly to seasonality of tourism, compared to the second quarter 1997. However, compared to the second quarter 1996, the overall balance expanded 62.5% as a result of 1.1% rise in imports and an 11.6% jump in export earnings ( over the second quarter 1997) from a moderately good off-season. Tourist and financial services export earnings rose 11.3% to $59.5mn while imports settled at $44.3mn. The external sector was further boosted by a slight fall in the strength of the US dollars against the ECU. However, the weakening of the US dollar against the Japanese Yen did not help in stemming the rising prices of imported durables, automobiles and electronic goods. Domestic economic activities were highlighted by a 4.7% expansion in bank credit mainly for private home construction, commercial transactions and personal purposes. Construction activities were further expanded by a $5.2mn level of public investment compared with the $2.4mn level seen during the second quarter. Adding to admirable private sector investment push was the good performance of the current account of the Central Government. Current revenue of $32.0mn represented a growth rate 37.3% over 1996 figures while current expenditure grew by 1.8% to $23.1mn. Economic activities on the domestic scene were further supported by a fall in the CPI annual rate to under 6.0% reversing the earlier trend which peaked at 8.2% in the second quarter (April 1997). The strength of the domestic sector was further underlined by moderate positive movement in indicators of land transport, business activities, corporate formation, utilities consumption and telecommunications services. Despite being an off peak economic period, comparable indicators for the similar period one year earlier suggest that the economy of the British Virgin Islands did moderately better than expected.
15. ECONOMIC OUTLOOK FOR THE FOURTH QUARTER, 1997 The fourth quarter will see a continued demonstration of the strength and diversification of the economy between external and domestic sectors, as well as between tourism and financial services and other supporting sectors such as construction. Benefiting from no interruptions because of natural disasters during the third quarter, the tourism sector should enjoy a more than moderate increase in most indicators. Financial Services, with its linkage to Central Government fiscal performance, should provide its customary steady stream of inflows. The fiscal situation of the Central Government is expected to improve providing the necessary resources to support planned capital outlays. Additionally, national investment should receive further boosting from the continued good levels of private sector activities as domestic credit for home construction, commercial activities and personal expenditures is expanded. Of course the demand for credit will be helped by a favourable and unchanged prime interest rate. The fourth quarter will set the positive trend for the next two quarters in 1998. Tourism is expected to rebound and surpass 1995 levels of output while financial services and construction will fuel the domestic sectors.
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