Its expansive white sand beaches and Caribbean locale may look like paradise, but the U.S. Virgin Islands’ economy is in a tailspin. The Bureau of Economic Analysis reports the territory’s GDP plunged 13.2 per cent last year, following a 6.6 per cent drop in 2011. That’s depression-era territory.
Though Caribbean tax havens have historically benefited from wealthy people and corporations sheltering money from tax collectors, the islands, as a territory of the United States, haven’t been able to do the same thanks to tough measures passed by the U.S. Congress. So the economy has always been dominated by the Hovensa oil refinery, one of the world’s largest. However, after several years of financial losses the company shut down operations, sending exports plummeting. Unemployment has rocketed four percentage points in the last two years and government salaries have been cut by eight per cent.
While rum production and tourism have increased, Donna Christensen, the territory’s delegate to the U.S. Congress, warns federal government cutbacks will inflict even more pain on the 105,000 residents of what should be a slice of tropical heaven.