Economic growth in Bonaire in 2018, Saba and Statia record contractions

Bonaire’s gross domestic product (GDP) increased by 3.9 per cent in volume in 2018, while St Eustatius recorded a contraction of 11.8 per cent and Saba’s GDP de­clined by 2.5 per cent, Sta­tistics Netherlands CBS reports based on newly-re­leased figures.

The GDP volume change is the development of GDP value, adjusted for price changes. The adjustment for price changes is based on the consumer price in­dex.

Bonaire

The value added by the ac­commodation and food ser­vices sector in Bonaire rose by 193 per cent. This made it the fastest-growing sector in 2018, together with financial institu­tions. The growth in accom­modation and food services is associated with the open­ing of new hotel and catering establishments in that year. The number of incoming air passengers and cruise tourists also increased, by 10 per cent. There were many construc­tion projects in Bonaire in 2018. Construction output rose by more than six per cent. Because intermediate consumption (goods and ser­vices used in the production process) rose less rapidly in this sector, the value added increased by 13 per cent. Demand for housing is high in Bonaire, which is also reflected in the number of transactions as well as house prices; in 2018, these rose by 52.8 and 21.6 per cent, re­spectively. Real estate agents and landlords benefited from this. The value added of the real estate sector increased by 9.5 per cent.

Business services also ben­efited from the strong hous­ing market. In addition, car rental companies in this sec­tor recorded growth due to the increase in tourism. Them were also sectors that performed less well hi 2018. The value added of the trans­portation, information and communication sector fell by 15.5 per cent.

This decline was caused by only a few large com­panies that operate in the transportation and storage of goods. These companies were negatively affected by developments in the region­al oil market. The remaining companies in this sector per­formed well in 2018. The de­cline in the agriculture and mining and quarrying sectors was also attributable to one large company.

The value added by energy companies decreased by 4.9 per cent because intermedi­ate consumption rose faster than the production of water (7.2 per cent) and electric­ity (-0.3 per cent). The same held true for the care sector, where output did increase, but less rapidly than inter­mediate consumption.

St Eustatius, Saba

The contraction in St. Eu­statius by 11.8 per cent was related to a few large com­panies on the island. Their production is mainly export-oriented and dependent on regional developments in the oil sector. In addition, they were affected by the conse­quences of Hurricanes Irma and Maria, which moved along the Windward Islands in September 2017.

Although these companies have a substantial impact on GDP, their impact on nation­al income is much more limit­ed. The profits of these com­panies are not included in the national income because they are wholly foreign-owned en­terprises; they contribute to the island’s labour income in particular.

In Saba, the contraction was caused by the effects of Hur­ricanes Irma and Maria. In­bound tourism by sea and air dropped by nearly 16 per cent in 2018. This diminished the value added of the accom­modation and food services sector. The education sector showed a decrease in value added as well, due to a de­clining number of students in 2018 compared to 2017.

Revision GDP

Revisions have taken place in the GDPs of Bonaire, St Eustatius and Saba this year. These have resulted in an up­ward adjustment of GDP on all three islands.

This is the first time that CBS — since the start of GDP mea­surements in the Caribbean Netherlands in 2014 (for re­porting year 2012) — has car­ried out GDP revisions. There are three reasons CBS has carried out revisions this year:

A greatly improved busi­ness register which includes all enterprises that carry out economic activities on the islands has become available during the course of this year. The register contains e.g. the sector (SBI 2008, an interna­tional standard classification of economic activities) and the number of persons employed per company. Collaboration with the Ca­ribbean Dutch tax authorities has been intensified in recent years, which has improved access to the financial data of local enterprises.

The sampling and upward revision method has been im­proved this year.

The revision has been car­ried out for reporting year 2017. This means that a new GDP level has been set for all three islands for 2017. Subse­quently, changes in the value and the volume of GDP prior to revision were used to calcu­late new GDP values in both current and 2017 prices for the years 2012 through 2016. For Bonaire and St Eusta­tius, the revision has led to a substantial upward revision of GDP in 2017: by US $52 million and $34 million re­spectively. The adjustment on Saba amounts to $1 mil­lion.

The reason for the major GDP revisions for 2017 is that the GDP was calculated in a completely different way before revision. In 2012, CBS determined the level of GDP for all three islands based on the sources available at that time. In the following years (2013-2017), GDP was calcu­lated by putting the develop­ments from the sources at the level of the GDP of the previ­ous year.

However, as the sources have improved significantly over the past six years, the level of GDP increasingly deviated from the sources. After the revision of GDP for 2017, GDP has been re­aligned with the levels of the sources.

The Daily Herald.