PHILIPSBURG--The local economy proved resilient in 2014 despite factors such as the passing of a hurricane, the uncertainty usually experienced during an election year and some global occurrences in major source markets. And the economic outlook for 2015 is one of positive growth, according the most recent Macro Monitor Report by the Department of Economic Affairs, Transportation and Telecommunication EVT.
The Year-End 2014 Macro Monitor Report and Outlook 2015 was compiled using data contributed by the St. Maarten Tourist Bureau, Department of Statistics, Ministry of Finance, Receiver's Office and St. Maarten Harbour Holding Company.
Review: 2014 vs. 2013
In comparing 2014 to 2013, various sectors show favourably: preliminary gross domestic product (GDP) estimates show growth of 1.6 per cent. This growth is substantiated by the exemplary performance in the tourism sector that in turn triggered the hotel and restaurant sector and the wholesale and retail sector, among others.
Stay-over arrivals to the island grew 7.1 per cent over the same period. This amounted to nearly 500,000 visitors, 50,000 more than the average number of visitors over the past 20 years.
Visitor arrivals from all major markets showed increased growth. The North American region had an 8.6 per cent increase, while Europe, the Caribbean, South American region and the rest of the world showed increasing growth between 3 and 7.5 per cent.
In the cruise sector, St. Maarten achieved the milestone of more than two million cruise arrivals, a growth of 12.1 per cent in comparison to 2013. Indications from both the airport and harbour are that activity in the transport and communication sector increased.
Arrivals at the airport grew 6.7 per cent. This was notable with the increased number of incoming commercial and chartered flights, which also resonates with the growth in stay-over visitors' arrivals. There was a six per cent increase in the number of aircraft arrivals, from 28,590 to 30,493.
The harbour reported increased activity in all areas of transport. Cruise ship arrivals increased by 10 per cent, while cargo ships increased by three per cent. Data collected from other berthing areas indicate that other ship arrivals also increased by four per cent.
There was a notable increase in the level of investment from the private sector. Some 334 new business licences, many of them for service-oriented businesses, were issued in 2014, compared to 282 in 2013. This represents an 18.4 per cent increase.
Financial institutions reported the value of business loans to local residents increasing 1.7 per cent, but there was an overall decrease of 2.9 per cent in the value of business loans issued, compared to 2013.
In the construction sector, although fewer building permits were issued, based on the information gathered from the Ministry of Public Works VROMI the estimated value of the construction projects for the period of 2014 surpassed that of 2013.
Inflation declined to 1.9 per cent, down 0.6 per cent. Exports increased by around 9 per cent, from NAf. 2.2 billion to an estimated NAf. 2.4 billion. Imports are also estimated to have increase by NAf. 89 million. A trade surplus was estimated again, as has been the experience over the past years.
Government revenues amounted to an estimated NAf. 430.2 million, compared to NAf. 491.5 million. This reduction was mainly attributed to decreased fees, concession revenue and other income from business collected in 2014. Notably, revenues collected for 2013 included concession revenue of NAf. 10 million, primarily from utilities company GEBE that related to the years 2015 and 2016.
Expenditures also decreased by 10.6 per cent: NAf. 438.4 million in 2014 compared to NAf. 490.6 million in 2013. Analysis of financial developments for 2013 indicates that there was a fiscal deficit of NAf. 8.2 million.
Based on EVT research and analysis, also spanning internationally, St. Maarten's economic outlook for 2015 is one of positive growth. Preliminary projections on key economic indicators are: real GDP growth of 1.3 per cent, inflation decreasing to 1.4 per cent, cruise arrivals to increase 1.8 per cent and stay-over arrivals to increase 1.8 per cent.
The projected developments are attributed to projected growth in the United States and other major economies on which St. Maarten depends. Prospects are also positive for South America and the Caribbean.
There is also the continued intent of government and a number of other private entities to embark on activities that will further trigger the construction, transport, hotel and restaurant, and telecommunication sectors.
Inflation is projected to decrease, which probably will be attributed to a continued drop in world oil prices and oil products. From the trade sector, exports are projected to grow 3.4 per cent, while imports are also projected to grow 1.4 per cent.
The majority of St. Maarten's export commodity has been in the form of tourism-related goods and services. This further cements the expected growth for 2015, given that both cruise and stay-over arrivals are projected to grow by 1.8 per cent. Likewise, imports are also expected to keep growing.
Analysis of fiscal developments for 2014 would indicate a decrease in both revenues and expenditures. However, a current account deficit of NAf. 8 million was created.
Considering government's intentions to be more vigilant in collecting taxes and ensuring compliance, as mentioned in the 2015 Budget speech, revenues are expected to increase by approximately NAf. 12 million, totalling approximately NAf. 442.3 million.
As for government expenditures, considering the increase in cost incurred by some ministries due to additional staffing and implementation of measures to ensure efficiency and quality services from the government sector ¬total expenditures are projected to increase by an estimated NAf. 11 million. This is expected to create a deficit of NAf. 6.9 million for 2015, with a projected expenditure of NAf. 449.2 million.
Inflation having shown a decline in 2014, the same is expected in 2015. EVT's preliminary projection is a rate of 1.4 per cent.
Finally, the report cited the weakening euro as possibly forcing Dutch-side wholesalers and retailers to lower prices to maintain market share, especially in light of a reduction in demand from French-side consumers, if the trend continues.
The full report can be reviewed on Government's website
www.sintmaartengov.org by selecting Ministry TEATT and then Ministry Policies and Reports.