TCIG Department of Strategic Policy and Planning (SPPD) is forecasting a 3.4 percent growth for the TCI economy in 2013. This growth is underpinned by a recovery in the tourism and construction sectors with spillovers into the wholesale and retail sectors. The Department cautions, however that actual growth will depend on the strength of the recovery in the US and the success of the government of the Turks and Caicos Islands in finding ways of diversifying the economy.
The Hotel and Restaurants which accounts for the largest portion of the Gross Domestic Product (GDP) is expected to grow by 2 percent in 2013. This just about makes up for the 3.5 per cent decline in the tourism sector in 2012.
Although the Turks and Caicos economy experienced a slight decline of 2.1 percent in 2012, evidence shows that the economy is stable and though fragile, has recovered from the disastrous 19.6 percent decline in 2009, which was partly reflective of the state of the world economy at that time.
Adjusting for indirect taxes and subsidies, GDP in constant market prices was estimated to have decreased by 2.1 percent to $540.6 million in 2012, but is expected to grow by 3.4 percent to $558.9 million in 2013.
Projections beyond 2013 show a continuous positive growth rate, as people adjust to new standards of living and become more comfortable with their purchasing power; the further strengthening of the industrial sectors and the emergence of new industries to take the lead in contributing to the growth of the TCI economy.
Given the importance of the tourism sector which accounted for 42.8 percent of GDP, it is not surprising that the overall economy recorded a slight decline of 2.1 percent in 2012. Sluggish performance in agriculture and fishing; manufacturing, construction and public administration and defense also contributed to the unfortunate results. A poor fishing season resulted in a decline of 32.9 percent in the Agriculture and Fishing in sector in 2012 as the fishing sector experienced a poor season.
Construction output, which is closely linked to capital investment in the tourism sector, also fell by 9.2 percent in 2012. This is also reflected in a decline in the importation of building materials relative to the previous year. Underlying these economic developments was also the political uncertainty related to the November 2012 parliamentary elections which may have been a contributor to delays in investment projects.
Construction activity is projected to increase in the last quarter of 2013 and is expected to surge in 2014, as a result of foreign direct investment in large-scale tourism related projects. These include the JW Marriot, the West Caicos Project and the Third Turtle Club, as well as the revitalisation of stalled projects and other proposed private sector projects. These will be complemented by significant public sector spending on capital works, which is expected to include a number of road works throughout the Turks and Caicos Islands; the continued expansion of the airport and the building of various classroom blocks around the islands among other government projects.
Overall mortgage commitments indicate that the challenges facing domestic private construction are expected to last into the medium term. As a result domestic private construction remains weak due to the relatively high unemployment rate but is expected to improve come 2014. Projects such as those outlined above and others will likely boost employment levels and local income. However, the modest US recovery (major source of TCI tourist arrivals) will continue to temper the rebound in the TCI. This underscores the need for greater diversification by the government and the TCI becoming less reliant on tourism as the major contributor to GDP.
SPPD wishes to thank the business community, public corporations, government agencies, and everyone, who has contributed, in one way or another, for the cooperation received in the provision of the necessary data. The department wishes to advise the businesses community that outstanding questionnaires to be submitted as they remain integral to the updating the estimates. The Department also thanks the public for their patience as we try to make the necessary data available.
