The British Virgin Islands (VI) economic recovery remained tepid in 2022, as strong headwinds from global economy unfolded. The full reopening of borders and strong demand for travel contributed to a resurgence in tourism, albeit below pre-pandemic levels; but the financial sector, the main driver of economic activity continues to be challenged. Fiscal balances deteriorated, but debt to gross domestic product (GDP) trended downwards to keep public finances compliant with key borrowing and fiscal ratios under VI’s Protocols for Effective Financial Management (PEFM)1. Key banking sector indicators improved, as the sector remained well capitalised. The external current account deficit expanded, with increased imports buoyed by higher prices and volumes. The medium-term outlook is cautiously optimistic with heightened downside risks related to the global economy and geopolitical tensions.
