MACRO-ECONOMIC REVIEW AND OUTLOOK, 2024-2026

The Macro-Economic Review and Outlook (MERO) is the Territory’s principal diagnostic instrument, developed through a strategic collaboration between the Ministry of Finance, various government departments, and the private sector. It provides a comprehensive summary of economic performance in 2024 and presents an analysis of the projected macroeconomic outlook for 2025 and 2026.

The report examines key economic indicators—including gross domestic product (GDP) growth, tourism, financial services, inflation, employment and earnings, population trends, and real estate activity—which collectively reflect the overall health of the economy and the well-being of the people of the Virgin Islands. It also informs the annual budget process, ensuring that policy decisions are grounded in the Territory’s empirical economic realities.

The Virgin Islands economy proved resilient in 2024, is stabilising in 2025, and is positioned for modest growth in 2026. Tourism and financial services remain strong anchors, inflation is easing, employment continues to improve, and while construction has slowed, future investment is expected to support renewed momentum.

The economy performed strongly in 2024, showing clear resilience despite global challenges. The Territory recorded nearly 4% growth in nominal terms and over 3% real growth, driven mainly by tourism and financial services. Employment rose, tourism surpassed one million visitors, and government revenues remained stable. While construction slowed, the overall economy continued its recovery toward pre pandemic levels.

Growth is expected to slow in 2025, then pick up again modestly in 2026.

•          2025 is a year of consolidation, with modest growth as construction activity remains subdued and global uncertainty persists.

•          2026 is expected to see renewed momentum, supported by public infrastructure projects, tourism expansion, and stable financial services activity.

In short, the outlook is cautiously optimistic, provided projects move forward as planned.

Inflation stood at 3.2% in 2024, reflecting higher global prices for food, fuel, freight, and other imported goods. Given the Territory’s heavy reliance on imports, these global pressures were felt locally by households and businesses.

Yes, but much more slowly than in 2024.

•          Inflation is projected at about 1.8% in 2025 and just over 2% in 2026.

•          This means prices are still rising, but at a more manageable pace.

That said, cost of living pressures remains especially challenging for low income households, since food and energy still take up a large share of spending.

Yes. The job market is continuing to grow, though at a moderate pace.

•          Employment increased by 2.6% in 2024.

•          Job growth is projected at 1–2% in 2025 and up to 3% in 2026.

Most new jobs are in tourism related and service industries, while construction and government services saw some declines, particularly in full time positions.

Yes. Tourism and financial services remain stable and central to the economy.

•          Tourism rebounded strongly, with over one million visitors in 2024, and continues to expand, particularly in higher value overnight and luxury segments.

•          Financial services continue to generate about one third of GDP and more than half of government revenue, with strong incorporation and fee activity.

Both sectors face external pressures, but reforms and diversification efforts are helping to maintain stability.

They are showing mixed performance.

•          Construction struggled in 2024, contracting significantly due to delays in major public and private projects.

•          Real estate performed better, with the number and value of sales increasing in 2024, largely supported by Belongers and first time homebuyers. Foreign investment, while fewer in number, continued to account for most of the value of sales.

•          Construction is expected to remain relatively flat in 2025, but improve in 2026 as infrastructure and tourism related projects gather pace.

•          Real estate is expected to remain stable in the short term, with activity supported by local buyers, though higher interest rates and processing delays may limit growth.

Medium term prospects for both sectors improve if infrastructure delivery accelerates and financing conditions continue to ease.