Friday, January 09, 2009

No Growth in Financial Services Industry Recorded in 2008

During the sitting of the House of Assembly, Premier and Minister for Finance Honourable Ralph T. O'Neal talked on the slowdown in the growth of new incorporations in the financial services sector of BVI, due to the downturn in the world economy. Answering to questions posed by the BVI Opposition Leader Dr. Orlando Smith, on the impact of the world economy downturn on the lower activity in the sphere of financial services and on Government's inability to comply with the revenue project for the year 2008, the Premier confirmed the minimum growth in this sphere in 2008, due to the economic climate changes worldwide. He also said it is too early to make the complete evaluation of what effects global economic situation will have on the local industry in the British Virgin Islands.

By words of Hon. Ralph O'Neal, while 2007 was the year of unprecedented growth with approximately 75,000 newly incorporated offshore companies, by the end of 2008 new incorporations were down 20%. However, according to preliminary figures, it is 3rd best year by the number of new incorporations, and revenue for the period has not fallen as sharply.

The Premier suggested that industries most affected by the global economic downturn will be captive insurance and mutual funds, and this is confirmed by the increased number of funds' requests for voluntary cancellation, by notification of suspensions of redemptions, and a downturn in the number of new applications. These are the signs of minimal or no growth in these spheres, particularly in the first half of 2009.

According to the information stated in the press release of the Government Information Service, financial services and tourism are the main industries launching the development of economy of BVI, and Government of the territory is committed to ensuring their survival. However, by the preliminary statistics for 2008, the global economic climate resulted in the decline of tourism industry.

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