Economical overview
Saint Lucia's economy has fundamentally
changed over the past three decades. The country's old
main industry, banana cultivation, has lost its dominant
position. Tourism is now the most important economic
sector.
At the same time, the entire service sector, which
includes tourism, has grown significantly and now
contributes to more than four fifths of the country's
gross domestic product (GDP). Tourism is estimated to
account for almost half of GDP and employ half the labor
force. At the same time, agriculture's share of GDP has
dropped drastically - from 15 percent in 1990 to less
than 3 percent in 2016. In the same year, banana
production accounted for a modest 0.6 percent of GDP.
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Countryaah.com:
Major imports by St. Lucia, covering a full list of top products imported by the country and trade value for each product category.
The banana industry has been facing major problems
since the early 1990s. Harvests have been repeatedly
destroyed by hurricanes, while competition in the
international market has increased as the EU has been
forced to bow to demands from Latin American banana
growers and liquidate the benefits that the Union
previously gave banana growers in the Caribbean. In
2016, banana exports to other Caribbean countries for
the first time generated higher revenues than the sale
of bananas to the traditional British market.
The economy is widening
To boost production, the banana industry and the
government have primarily supported the growers who have
the greatest chance of succeeding. This applies
primarily to those whose crops are not overly
impenetrable and who have access to irrigation. Growers
have also been encouraged to focus on organic and
fair-labeled production, and to try new crops such as
avocados. Coconuts, mangoes, cocoa and citrus fruits are
also important agricultural products. However, the
problems in the banana industry have persisted.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including LCA which represents the country of St. Lucia.
In order to reduce the dependence on banana exports
and tourism, the government has invested in lighter
industries and compound factories. Special free zones
with low taxes and duties have been formed to attract
companies to Saint Lucia. The zones produce food,
electronic components, textiles, beer, rum and cartons,
among other things.
The decline of the banana industry combined with
increased competition from other tourist countries and
high production costs as a result of a high wage
situation meant that economic growth during the 1990s
was low. During the first eight years of the 2000s, the
economy improved, mainly due to tourism once again
accelerating. But the positive trend did not spread to
other parts of the economy and from 2009, when the
effects of the global financial crisis became evident
with falling tourism incomes, growth has been low or
negative.
Tourism and finance
Until the 2010s, the necessary investments in the
tourism industry were mainly financed with large loans
abroad. Government debt and the budget deficit grew
rapidly. In order to increase revenue to the Treasury
and reduce the central government debt, a VAT of 15
percent was introduced in 2012 (in 2017 it was reduced
to 12.5 percent). During much of the 2010s, the
government froze or lowered the salaries of civil
servants.
However, when the central government debt remained
high, the SLP government launched in early 2016 a
program that allows foreigners to buy citizenship in
Saint Lucia in exchange for extensive investments.
However, the program received criticism, among other
things from the US, as the passport sale risks making it
easier for criminals from abroad to launder black money
in Saint Lucia's financial system. Despite the
criticism, the "citizenship against investment" program
was expanded a year later, when it was shown to generate
good profits. In 2016, however, the central government
debt share of GDP was still high, just over 83 percent.
After the necessary legislation was introduced,
several hundred international companies established
themselves on the island in the early 2000s to conduct
so-called offshore operations. As a result, Saint Lucia
eventually ended up in the OECD economic list of
countries that do not do enough to prevent their
financial sectors from being used for money laundering
(to turn illegally earned money into legal assets).
Saint Lucia has taken some measures to meet the world's
demands for better control of the financial sector, and
in 2010 the OECD removed the country from the gray list.
However, Saint Lucia continues to receive criticism from
the United States for not fighting money laundering
enough.
FACTS - FINANCE
GDP per person
US $ 10,315 (2018)
Total GDP
US $ 1,876 million (2018)
GDP growth
0.6 percent (2018)
Agriculture's share of GDP
2.1 percent (2018)
Manufacturing industry's share of GDP
2.3 percent (2018)
The service sector's share of GDP
75.1 percent (2018)
Inflation
2.1 percent (2019)
Government debt's share of GDP
64.3 percent (2018)
External debt
US $ 622 million (2017)
Currency
eastern Caribbean dollar
Assistance per person
US $ 71 (2017)
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