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Indicators> Economic Indicators> Quarterly Bulletin Third Quarter 1999 |
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Quarterly Bulletin Third Quarter 1999
Volume (5) No. (3) October, 1999 Main
Economic Indicators The Consumer Price Index, at the end of the third quarter (September) of 1999 stood at 119.4; up 0.2 points from the 119.2 index level recorded in the previous month (August). At the end of the previous quarter (June 1999), the index stood at 119.3; whereas a half year earlier (March 1999), the index level was 118.3. Insofar as the quarterly comparison is concerned, the subgroups indicated the following changes i.e. the Food, Beverage & Tobacco and Furniture & Household Supplies subgroups declined by 0.16 and 0.15 percent respectively, the Clothing & Footwear and the Miscellaneous subgroups showed increases of 0.44 and 1.17 percent respectively, and the Housing, Transportation and Services subgroup remained unchanged. The point to-point monthly, quarterly, half-yearly and annual rates of inflation stood at 0.17, 0.08, 0.93 and 1.10 percent respectively.
Annual Inflation Rates
The local currency, the US dollar, changed trends for the second consecutive quarter and strengthened against the key foreign currencies in our international trade. The European Community Euro continued its slide recording a 21.1% drop from $1.32 to $1.04. The Canadian dollar fell slightly to $0.69 from $0.71 whereas the British Pound dropped one cent to $1.63. On the other hand, the Japanese Yen fell 23.5% to $1.01. The general strengthening of the US dollar helps our international trade in the imports of goods and services but makes our exports of goods and services more expensive for foreign markets except the United States of America.
Currencies vs United States Dollar
3. Transactions with the Rest of the World The balance on transactions with the rest of the world continues to be positive and growing as evidenced by the $28.01m estimated during the third quarter 1999. In comparison with the third quarter 1997, the 8.2% rise in the overall balance from $18.5m came as a result of a combination of 11.0% and 18.6% rises in the level of imports and exports, respectively. In terms of imports, there were 4.4% and 16.5% increases in the level of goods and services purchased by resident entities. Exports of goods and services were characterized by 14.5% and 18.6% increases in goods and services and services purchased, respectively. This good overall performance came as a result of a better than expected tourism performance and the sterling performance of international financial services.
Current Account: Major Components ($000)
Although deposits in aggregate grew 4.4% to reach a record high of $1.01 billion, savings deposits, normally held by small savers, fell 10.4% to $184.7 million while demand deposits or chequing accounts and certificates of deposits rose 5.1% to $242.5 million and rose 9.8% to $583.3 million, respectively, when compared to the second quarter 1999. The index of deposits rose from 317 to 331. Unlike earlier in the year, loans outstanding grew at a much slower rate of 2.2% to reach a record high of $509.9 million. The slower rate of growth in credit comes during a slow and flat economic period with a decreased average prime rate of 7.94%. The index of loans outstanding jumped on 2 index points to 344.
Indices of Deposits and Loans
5. General Business Indicators: Trade Licenses Paid Most types of businesses operating in the BVI are required to do so under a trade licence. The exceptions are liquor-retailing establishments, trust companies, insurance companies and other financial intermediaries. The number of trade licences operating or authorized to operate amounted to 3,446 or an increase of 1.6% over the previous quarter. The number of licences approved rose 20.0% to 54 in the review quarter over the previous quarter.
Quarterly Issue of Trade Licences
6. General Business Indicators: Companies Incorporated As a general business indicator, the formation of local companies signals the degree to which our corporate sector is developing. Compared to the third quarters of 1997 and 1998, the formation of local companies increased 9.5% and 9.5%, respectively. However the review quarter registration of 46 companies represented a drop from 53 companies registered in the previous quarter. The index of companies registered per quarter now stands at 159 compared to the number registered in the first quarter of 1991.
Company Registration
Central Government finance gives an indication of the capacity of the Government for investment and meeting of its operational obligations. A comparison of the review quarter revenue with the third quarters of 1997 and 1998 reveals a fall of 3.6% and a growth rate of 17.7%, respectively. Because of the seasonality of tourism and the company registration period, revenue for the second quarter 1998 was $52.0m, up 68.5% over the review quarter. On the other hand, total expenditure fell 18.2% and 6.1% compared to the third quarters of the previous two years. Current revenue, the largest component of total expenditure, fell 17.5%, 9.3% and 23.6% compared to the third quarter of 1997, the third quarter of 1998 and the second quarter of 1999. Capital expenditure fell 28.6%, rose 28.7% and fell 9.0% against the like periods in 1997, 1998 and the third quarter of 1999, respectively.
Central Government Spending
8. Energy: Electricity and Water Having sustained little damage from the passage of hurricane Jose, utilities in the British Virgin Islands did not record any significant down time or loss in customer demand. Electricity generated and consumed grew 5.7% and 6.0%, respectively compared to the second quarter 1999. Unlike electricity distribution, water distribution is less likely to be negatively impacted by the passage of a hurricane as its pipes are buried underground. In the absence of electricity, water consumption is bound to be reduced. However, water produced and consumed rose 4.8% and 5.4%, respectively compared to the second quarter 1999.
Electricity and Water Activity
Land transport is a key component of economic activities in the British Virgin Islands particularly in the construction, tourism and the personal sectors. Transport indicates the mobility of communities. The number of vehicles licensed during the review period fell 6.5%, rose 24.3% and 11.4% when compared with the number licensed in the second quarter of 1999, the third quarter of 1997 and the third quarter of 1998, respectively. Compared to the third quarter of 1998 the number of private cars rose 30.1%, the number of transport vehicles fell 31.0% and the number of other vehicles, including commercially used vehicles, grew 6.7%. Compared to the third quarter two years ago, the number of transport vehicles fell 28.2%, the number of private cars expanded 49.2% and the number of other vehicles grew 16.4%.
Motor Vehicles by Type
r= revised Telecommunications activities are not expected to expand substantially neither are they expected to be impacted by the passage of hurricanes in the third quarter. However, the passage of Hurricane Jose during the third quarter did not impact very much on telecommunications in terms of reducing demand. Available data and Development Planning Unit estimates suggest that local calls moved up slightly to an index of 187 while international calls grew slightly more to settle an index of 178 compared to the previous quarter. The index of international call minutes moved up to 176 from 172.
Index of Telephone Calls
Construction activities in the economy of the British Virgin Islands are a good indicator of the level of capital formation taking place. Construction is the vehicle by which our basic economic infrastructure is being developed including housing, roads, bridges, office accommodation, airports, seaports, etc. The value of the selected list of basic construction material imported into the territory fell 18.8% to $1.47 million compared to the second quarter 1999. All categories of imports in this area fell except for steel which grew 2.2%. The fall in plumbing materials, rough lumber, nails, paints and cement, and the small growth in loans and advances outstanding are indicative of a fall off in construction activities. (US$ dollars)
Imports of Construction Materials
Due to the seasonal nature of tourist activities, comparison is usually made with like quarter of each year rather than the previous quarter. Third quarter tourism indicators were highlighted by a 14.7% rise in overnight visitors to 51,335, a 13.8% increase in number of tourist nights to 361,692 and a 15.6% expansion in tourist expenditure to $41.5 million. The number of cruiseship visitors were 15,488 compared to 21,797 seen during the previous quarter.
Tourist Arrivals
13. International Financial Services The formation and annual registration of International Business Companies (IBCs) is the essence of international financial services in the British Virgin Islands. Preliminary figures for the third quarter show that formation of new companies are 3p times faster than during the first quarter of 1991. The index of companies carried on the books is nine times (899) greater than the number carried at the end of the first quarter 1991. The index of incorporation below reflects gross formation only whereas the index of registration reflects the net situation
IBCs Registration
14. Economic Performance Summary Review Fuelled by strong performances in financial services and tourist activities, the economy was able to record net expansion inspite of hurricane Jose. The external sector recorded a small net increase in the overall balance on transactions with the Rest of the World. The expansion of domestic credit continues and loans for commercial and home construction led the way as domestic aggregate demand rose in comparison to the third quarter last year. The Consumer Price Index, at the end of the third quarter (September) of 1999 stood at 119.4; up 0.2 points from the 119.2 index level recorded in the previous month (August). At the end of the previous quarter (June 1999), the index stood at 119.3; whereas a half year earlier (March 1999), the index level was 118.3. The European Community Euro continued its slide recording a 21.1% drop from $1.32 to $1.04. The Canadian dollar fell slightly to $0.69 from $0.71 whereas the British Pound dropped one cent to $1.63. On the other hand, the Japanese Yen fell 23.5% to $1.01. Overall deposits rose 4.4% to reach $1.01m for the first time and loans outstanding expanded $5.09.9m also for the first time. The average prime interest remained unchanged at 7.94%. The expansion of domestic credit is supported by increased investment activities as indicated by a 1.6% rise in the number of trade licences paid to 3,446 and a 9.5% increase in the number of local companies registered. Current revenue, the largest component of total expenditure, fell 17.5%, 9.3% and 23.6% compared to the third quarter of 1997, the third quarter of 1998 and the second quarter of 1999. Capital expenditure fell 28.6%, rose 28.7% and fell 9.0% against the like periods in 1997, 1998 and the third quarter of 1999, respectively Third quarter tourism indicators were highlighted by a 14.7% rise in overnight visitors to 51,335, a 13.8% increase in number of tourist nights to 361,692 and a 15.6% expansion in tourist expenditure to $41.5 million. Financial services continued its outstanding performances increasing the flow of income on the national accounts balance sheets with increased incorporation of international business companies and mutual funds. Electricity generated and consumed grew 5.7% and 6.0%, respectively compared to the second quarter 1999. In the absence of electricity, water consumption is bound to be reduced. However, water produced and consumed rose 4.8% and 5.4%, respectively compared to the second quarter 1999.
15. Economic Outlook for the Fourth Quarter, 1999 Economic prospects for the fourth quarter appear to be better than good given the shape of the tourism sector, the continued outstanding performance of international financial services, the health of the construction sector, the normally good sales during the Christmas holidays and the expected upsurge in commercial activities leading up to the millennium celebrations. In addition an acceleration in government capital outlays is expected as long due projects come close to implementation. Having come through the passage of hurricanes Jose and Lenny without any serious damage, the tourism sector is well poised to handle the expected expansion in regular activities and extraordinary activities connected with the next millennium celebrations. The registration of international business companies and mutual funds should continue to boost revenues from international financial services while the expansion in credit for home construction from the banking system and government capital spending will propel an already busy construction sector. Consumer spending on food, non-durables and durables is expected to increase substantially because of increased disposable income as result of bonuses, overtime and longer work periods. The Christmas holidays in combination with millennium celebrations are expected to increase spending on food, recreation and entertainment among both residents and tourists alike. Finally, end of year spending and capital spending on projects by departments of Government will contribute to increased economic activities nationally. The fourth quarter is expected to be a very good quarter of economic activity in all sectors of the economy starting the next millennium off on a good note for the British Virgin Islands.
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