SABA/SINT EUSTATIUS – In 2018, Bonaire's gross domestic product (GDP) increased by 3.9 percent in volume. St Eustatius recorded a contraction of 11.8 percent and Saba’s GDP declined by 2.5 percent. Statistics Netherlands (CBS) reports this 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.
Contraction on St Eustatius and Saba
The contraction on St. Eustatius, by 11.8 percent, 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.
On Saba, the contraction was caused by the effects of hurricanes Irma and Maria. Inbound tourism by sea and air dropped by nearly 16 percent 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.
Bonaire: growth in accommodation and food services, construction and financial sector
The value added** of the accommodation and food services sector on Bonaire rose by 19.3 percent. 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 percent. There were many construction projects on Bonaire in 2018. Construction output rose by more than 6 percent. Since intermediate consumption (goods and services used in the production process) rose less rapidly in this sector, the value added increased by 13 percent.
Demand for housing is high on 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 percent, respectively. Real estate agents and landlords benefited from this. The value added of the real estate sector increased by 9.5 percent.
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.
There were also sectors that performed less well in 2018. The value added of the transportation, information and communication sector fell by 15.5 percent. 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 of energy companies decreased by 4.9 percent because intermediate consumption rose faster than the production of water (7.2 percent) and electricity (-0.3 percent). The same held true for the care sector, where output did increase, but less rapidly than intermediate consumption.
Revision of GDP in the Caribbean Netherlands
This year, revisions have taken place in the GDP of Bonaire, St Eustatius and Saba. These have resulted in an upward adjustment of GDP on all three islands. More information on the revision*** can be found at the end of this article.
Statline - Caribbean Netherlands; gross domestic product (GDP)
StatLine – Bonaire; Gross value added in basic prices per industry
News – Bonaire, House price index 2018
*GDP: The final result of productive activities of production units in the Netherlands. It equals the sum of value added in all sectors of industry, and includes some transactions that are not classified by sector of industry.
**Value added: The income formed in the production process. The value added equals the production (in basic prices) minus intermediate consumption (in purchasing prices). Value added is the income available to reward the production factors involved.
***GDP revisions on Bonaire, St Eustatius and Saba:
National accounts are revised periodically. New sources, methods and concepts are implemented to ensure that the picture of the Dutch economy is again optimally aligned with all the underlying statistics, sources and international guidelines on the compilation of the national accounts.
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 why CBS has carried out revisions this year:
- During the course of this year, a greatly improved business register has become available which includes all enterprises that carry out economic activities on the islands. 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 52 million and 34 million US dollars, respectively. The adjustment on Saba amounts to 1 million US dollars.
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 re-aligned with the levels of the sources.