The estimates of gross domestic product (GDP) for the U.S. Virgin Islands show that real GDP—adjusted to remove price changes—decreased 13.2 percent in 2012 after decreasing 6.6 percent in 2011.
In contrast, real GDP for the United States (excluding the territories) increased 2.8 percent in 2012 after increasing 1.8 percent in 2011.
The decline in the Virgin Islands economy reflected decreases in exports of goods and territorial government spending.
The decrease in exports of goods, particularly the sharp drop in 2012, reflected the decline of the petroleum refining industry that for many years had played a dominant role in the economy. The Hovensa oil refinery, one of the world’s largest oil refineries, shut down operations on St. Croix in early 2012.
Excluding the imports, exports, and inventory investment of the petroleum refining industry, GDP would have increased 2.6 percent in 2012, primarily reflecting growth in exports of rum.
Territorial government spending contributed to the economic decline in 2011 and in 2012. Government construction activity decreased in both years, with activity in 2012 dropping more steeply than in 2011.
Compensation of government employees also fell in both years, reflecting declines in government employment.
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