Cayman’s trade deficit grew by more than 5 percent in 2014, a further indication of the territory’s improving economy, according to the latest foreign trade report released this week.
The trade deficit, a measure of imports and exports, had been relatively flat in 2012 and 2013. The growth last year from $749 million to $791 million indicates higher economic activity, according to statisticians from the Economics and Statistics Office, who compile and release the data each quarter.
“We import basically everything,” said ESO senior statistician Julietta Beaupierre. “When you see an increase in the deficit, that definitely indicates something is happening in the economy,” she said, pointing to increases in construction material imports showing more building activity in the country.
Food and fuels account for most imports to the Cayman Islands, each accounting for about 20 percent of imports. Last year, food imports increased by more than 15 percent, but fuels decreased by almost 5 percent. That decrease, Ms. Beaupierre said, shows how fuel prices decreased because the total volume of petrol imported in 2014 actually increased.
Road vehicle imports went up by almost 30 percent between 2013 and 2014, approaching $50 million in imports last year.
Telecommunications equipment has seen steep growth over the past five years, from $8.5 million in 2010 to $20.3 million last year.
“Investment continues to increase in the telecom industry,” the statistician said.
Exports have never been a major part of the Cayman economy. “We’re a service-based economy,” Ms. Beaupierre said. The country’s exports were $21.9 million last year, down from $25.3 million in 2013, according to the report.
More than 70 percent of exports involved “re-exports of personal effects,” the report states, essentially people shipping their household goods somewhere else when they move off island.
Ms. Beaupierre said the report is for more than economic analysis, showing where there are opportunities for local companies to grow and “increase their market share.” She pointed to food imports as one potential opportunity for local farmers to build their businesses.
The bulk of imports, almost 95 percent, came from the United States. The rest came from Jamaica, the United Kingdom and an assortment of other countries. The report does note, however, “Figures on imports from the USA tend to be overstated while those from other countries tend to be underestimated due to the shipment of Cayman Islands-bound imports through Florida.”
The trade deficit figures track closely with how well the Cayman economy is doing, as measured by gross domestic product and unemployment. The deficit decreased sharply in the years following the global 2008 recession. Growth ticked up significantly in 2011, increasing by 9 percent, only to be followed by two years of little to no movement.
In the years before the recession, Cayman’s trade deficit hovered in the mid to high $800 million range.