Gross Domestic Product. The US economy accelerated for the second consecutive quarter, up 5.7% on an annualized basis in Q4 2009, after a gain of 2.2% in the last quarter. US GDP growth is up 0.1% on a year-over-year basis, a significant improvement over the -2.6% year-over-year contraction in the last quarter. Much of the growth was driven by inventory rebuilding and strength in the trade balance. Net exports rose 18.1% on a quarterly basis, well above the 10.5% growth in net imports. Business equipment spending increased significantly in the fourth quarter by 13.3%, due to the US President’s proposal to provide investment tax credits. Residential investment also rose by 5.7% in the last quarter of 2009 as favourable mortgage rates and increased affordability boosted demand for construction and renovations. Consumer spending moderated to 2.0% as the effects from the cash-for-clunkers program were largely reflected in sales in Q3. Economists generally believe the US economy has started to recover from the deep economic recession and expect the economy to continue to expand in the first quarter of 2010. Real GDP growth is forecast to increase by 2.7% in 2010, up from the decline of 2.4% in 2009. 1 Bloomberg, Economic Forecasts; BMO Capital Markets, Econofacts, January 2010; CIBC, Monthly FX Outlook, November 30, 2009; Conference Board Consumer Confidence Index Press Release, January 26, 2010; Federal Reserve Open Market Committee, Press Release, December 16, 2009; PricewaterhouseCoopers LLP, Trendsetter Barometer Business Outlook Report, November 2009 TD Economics, Commentary, January 2010; Bloomberg, figures are as of end of period; BMO, Capital Markets Economics, quarterly figures are annualized; Bloomberg, quarterly figures are year-over-year as of the end of quarter; Bloomberg, figures are as of end of period. APPENDIX B OPTIMAL GROUP INC. FORMAL VALUATION AS AT DECEMBER 31, 2009 ECONOMIC OVERVIEW Inflation: US consumer prices increased moderately by 0.1% in December and the year-over-year inflation rate rose to 2.7% largely due to the fall in energy prices that occurred in late 2008. Consumer prices remained subdued in the period, leading to the minor increase in inflation in December. Advances were led mainly by food (+0.2%), energy (+0.2%), clothing (+0.4%), transportation (+0.4%), medical care (+0.1) and education (+0.4). The rise in prices in the period were partially offset by declines in new vehicle prices (-0.3%) and recreation (-0.4%). Owner’s equivalent rent remained...
Gross Domestic Product. The European Union’s economy experienced the first positive GDP growth after five previous quarters of consecutive declines. GDP increased 0.4% in the third quarter of 2009, after declining by 0.2% in the previous period. Despite the GDP growth in Q3, year-over-year GDP contracted by 4.1%, suggesting a long road to recovery. The advance in quarterly GDP growth is mostly attributable to inventories and net exports. Exports increased by 3.1% in the quarter, while imports rose by 3.0%. Inventories, boosted by a slowdown in the pace of destocking, contributed a 0.5% increase to GDP growth in the third quarter of 2009. Declines in domestic demand partially offset the gains in GDP due to falls in investment and private consumption. On a year-over-year basis, private consumption declined 0.2% in the third quarter after experiencing moderate gains in Q2. Investments fell by 0.4% year-over-year in the third quarter. Consumer spending remained muted in the third quarter, with retail sales posting a quarterly decline of 0.5%. Economists project real GDP growth will contract by 3.9% in 2009 before improving moderately to 1.2% in 2010. Inflation: After dipping to all-time lows in July 2009, inflation has been steadily increasing. Consumer prices increased to 1.0% in January 2010, up 0.1% from the previous month. The moderate rise in inflation rate was primarily driven by increases in energy and food prices. Core inflation, which excludes energy, food, alcohol and tobacco, also increased slightly to 1.1% in December from 1.0% in November. With ongoing deterioration of the labour market 1 Bloomberg Forecasts; BNP Paribas – Economic Research Department, EcoFlash: ECB left key policy rate unchanged, December 3, 2009; BNP Paribas – Economic Research Department, EcoFlash: Eurozone Inflation up to 1% in January, January 29, 2010; BNP Paribas – Economic Research Department, EcoFlash: GDP up again in Q3, December 3, 2009; European Central Bank, ECB Monthly Bulletin, January 2010; IMF, World Economic Outlook, October 2009; Scotiabank, Europe Weekly Outlook, January 29, 2010; Scotiabank, International Views, Xxxxxx Xxxxxxx 0000 XXXXXXXX X OPTIMAL GROUP INC. FORMAL VALUATION AS AT DECEMBER 31, 2009 ECONOMIC OVERVIEW conditions, it is anticipated that inflation will remain below the official target range of 2% for the remainder of 2010.
Gross Domestic Product. In terms of growth, the Territory’s nominal GDP fell from $915.6 million in 2011 to $909.4 million in 2012 – a decline of 0.68 percent. This is in contrast to significant growth between 2009 and 2011 of approximately 2.2 percent, evidencing a potential recovery from the global economic crisis. In assessing GDP by economic activity, disruptions in the continuation of some on-going private sector projects, along with certain unanticipated public sector project delays impacted the level of growth in the construction sector in 2012. Although, approximately $42 million, which represented 80 percent of total value of construction GDP ($51.9 million), was spent by government on capital projects, the significant disruptions in private sector projects and a decline in residential construction resulted in an overall decline in this activity. Consequently, the sector suffered a contraction of 2.4 percent. Increased overnight visitor arrivals in 2012 as a result of a strong charter boat industry, along with increased high- end tourism contributed to a higher output (1.9 percent) from the tourism sector compared to 2011 output. The contribution of the financial services sector to overall economic growth did not change from 2011 since the re-registrations of companies remained strong.
Gross Domestic Product. A less optimistic global outlook for 2013 could further affect tourism, financial services, foreign direct investment and other ancillary industries, such as construction and real estate in the Virgin Islands. Preliminary GDP estimates for 2013 indicate a further decline in the Virgin Islands economy. Unless there is an inflow of foreign direct investment or the commencement of major new infrastructural development projects in the fourth quarter of 2013, growth prospects for 2013 remain low and a contraction between 1-3% is anticipated. The outlook for the Virgin Islands economy in 2014-2016, however is much more optimistic. It is anticipated that there will be economic growth in 2014 which could reach 1%. By 2016 growth is projected at 2% barring any unforeseen shocks to the economy. Increased investment in the physical infrastructure of the Territory in the medium term through planned capital projects, such as the Cruise Pier Development, the Xxxxxxxx X. Xxxxxxxx Airport Expansion, and the Sewerage project, are expected to stimulate the construction sector in the economy. The stimulus to this sector would contribute to and maintain the economic recovery in the Territory. As a result of growth in the construction sector, there will be increased demand for the services of other sectors such as wholesale and retail, hotels and restaurants, financial services, and real estate, renting and business services. The advent of the cruise ship and port projects, enhancement and diversification of the tourism product, initiatives being undertaken within the Financial Services sector, and financing incentives for the small business sector will bring much needed economic activity to the Territory by the latter part of 2014 spilling over into 2015, 2016 and beyond. The return to positive growth in GDP is therefore expected in the medium term. However, a sustainable level of economic growth in the medium to long term is still highly dependent on improvements in the global economy. A slower than expected global economic recovery could translate to lower growth prospects for the Virgin Islands.
Gross Domestic Product. Expectations indicated that, with NAFTA, Mexico’s economy would grow between 6 and 12% while the US economy would only grow at less than 0.5%. The explanation was the relative importance of the two countries on their respective trade balance and the level of reduction in barriers, which in the US was smaller since there were almost no barriers to reduce. Before NAFTA, Mexico´s GDP was growing at 1% on average. In 1995 the GDP decreased 6.2%, probably due to the 1994 peso crisis and subse- quence devaluation. Between 1996 and 2000 the economy grew up at rates oscillating between 3.6% and 6.8% to go back to less than 1% after that. Therefore the Mexican economy has been fluctuating without a clear trend, so that no stability was achieved with NAFTA. The US economy has also shown fluctuations, not as deep as those in Mexico, not attributable to the evolution of GDP in that other country but to internal macroeconomic issues and the international scenario. As for the peso crisis itself, there is no agreement about its relation with NAFTA. Several papers con- clude that such a crisis cannot be related to NAFTA, and even consider that NAFTA softened the effects of the crisis on the Mexican economy, since border states experienced less wage reduction, unemplo- yment and informality than other regions, and even beneficiated from devaluation. Others attribute the crisis to capital inflows into Mexico that could not be controlled by the authorities due to both the protec- tionist policies they were used to, and the influence of foreign investors in the financial system also as result of the agreement (Xxxxxxx, 1997). This economic grow was not enough as to offset or at least smooth income inequalities between the two countries, even though it is true that some so- cial and economic sectors became more dynamic. If the US per capita income was 4 times the one in Mexico before NAFTA and 5 times higher by 2007. Moreover, the number of homes under poverty increased between 1991 and 2006, although this may be also explained by the availability of more accurate statistics. This positive but poor effect of NAFTA on the Mexican economic grow may be explained again by the lack of interaction of the maquilas with other sectors. The foreign direct investment just genera- xxx employment at the border, especially Ciudad Xxxxxx and Tijuana, deepening heterogeneity and inequalities among workers, productive sectors and regions in Mexico. For example, population at Bor- der States gr...
