Falling fuel prices skew economic stats

The Cayman Islands’ economy grew by an estimated 1.6 per cent in the first six months of 2015, as the first quarter growth of 1.4 per cent further strengthened to 1.7 per cent in the second quarter, according to the latest figures released by the Economics and Statistics Office (ESO).

The economic performance for the first six months is lower than the 2.2 per cent growth for the same period a year ago. Government said this was due mainly to a slow-down in the growth for hotels and restaurants arising from “a moderation in the growth rate of stay-over and cruise arrivals during the period”. The wholesale and retail trade and transportation, communication and storage sectors also indicated lower activity.

“While unplanned, the moderation in growth so far in 2015 is not totally unexpected,” Finance and Economic Development Minister Marco Archer said. “This is consistent with the International Monetary Fund’s downscaling of global and US growth for 2015, which impacted key local sectors such as hotels and restaurants.”

Nonetheless, improved economic performance was indicated in the following sectors: real estate, renting and business services; construction; other services, financing and insurance services; and agriculture and fishing, mining, quarrying and manufacturing.

“I am, however, pleased to note that the fiscal performance continued to improve,” Mr Archer added. “The central government’s overall fiscal surplus at $115.1 million is 14.8 per cent higher than a year earlier, while the central government’s outstanding debt amounting to $520.3 million is 4.9 per cent lower from the same period a year ago.”

Meantime, the latest figures show the Consumer Price Index (CPI) falling in the third quarter by 2.9 per cent compared to the same quarter in 2014. This marks the third quarter of consecutive annual deflation in the Cayman Islands. In the first quarter, the CPI moved downward by 0.4 per cent and by 3.6 per cent in the second.

Deflation is the general level of prices for goods and services. The downward trend is largely based on declining fuel prices, which moved from near $6.00 a gallon to closer to $4.00 as the year draws to a close. Global oil prices fell steadily throughout 2015.

This was also reflected in a fall in the overall value of imports to the Cayman Islands for the thirst straight quarter of the year. The total value of all merchandise goods imported into the country amounted to CI$178.8 million, lower by 9.1 per cent as compared to $196.6 million in the same period in 2014.

“The decline largely reflects the impact of depressed international oil prices on petroleum-related imports, which continued to rise in quantity,” the Finance and Economic Development Minister said.

Non-petroleum products, which accounted for 84.9 per cent of total imports, fell at a comparatively lower rate of 3.3 per cent. Among the major sub-categories, miscellaneous manufactured goods which included professional equipment, furniture parts and road vehicles registered the largest contractions.