Economy of Saint Kitts and Nevis
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Saint Kitts and Nevis was the last sugar monoculture in the Eastern Caribbean. Faced with a sugar industry that was finding it increasingly difficult to earn a profit, the Government of St. Kitts and Nevis embarked on a program to diversify the agricultural sector and stimulate the development of other sectors of the economy.
The government instituted a program of investment incentives for businesses considering the possibility of locating in St. Kitts or Nevis, encouraging both domestic and foreign private investment. Government policies provide liberal tax holidays, duty-free import of equipment and materials, and subsidies for training provided to local personnel. Tourism has shown the greatest growth. By 1987, tourism had surpassed sugar as the major foreign exchange earner for St. Kitts and Nevis.
The economy of St. Kitts and Nevis experienced strong growth for most of the 1990s but hurricanes in 1998 and 1999 contributed to a sharp slowdown. Real economic growth was 0.75 % in 2002 after a decline of 4.3 % in 2001. The economy experienced a mixed performance during 2002, with some sectors experiencing positive growth while others experienced varying levels of decline. The construction sector recorded a 4.51 % decline, manufacturing and hotels and restaurants also recorded significant declines of 4.01 and 9.89 % respectively, and sugar production fell by 5.1 %. Significant new investment in tourism, including a 648-room Marriott hotel and convention center that opened in December 2002, as well as continued government efforts to diversify the economy, are expected to improve economic performance. Consumer prices have risen marginally over the past few years. The inflation rate was 3%-4% for most of the 1990s.
St. Kitts and Nevis is a member of the Eastern Caribbean Currency Union (ECCU) The Eastern Caribbean Central Bank (ECCB) issues a common currency for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries.
St. Kitts is a member of the Eastern Caribbean Telecommunications (ECTEL) authority, which is developing the regulations to liberalize the telecommunications sector in the region by 2004.
Economy - overview The economy has traditionally depended on the growing and processing of sugar cane; decreasing world prices have hurt the industry in recent years. Tourism, export-oriented manufacturing, and offshore banking activity have assumed larger roles. Most food is imported. The government has undertaken a program designed to revitalize the faltering sugar sector. It is also working to improve revenue collection in order to better fund social programs. In 1997, some leaders in Nevis were urging separation from Saint Kitts on the basis that Nevis was paying far more in taxes than it was receiving in government services, but the vote on cessation failed in August 1998. In late September 1998, Hurricane Georges caused approximately $445 million in damages and limited GDP growth for the year.
GDP: purchasing power parity - $244 million (1998 est.) GDP - real growth rate: 1.6% (1998 est.) GDP - per capita: purchasing power parity - $6,000 (1998 est.) GDP - composition by sector: agriculture: 5.5% industry: 22.5% services: 72% (1996) Inflation rate (consumer prices): 1% (1998 est.) Labor force: 18,172 (June 1995) Unemployment rate: 4.5% (1997) Budget: revenues: $64.1 million expenditures: $73.3 million, including capital expenditures of $10.4 million (1997 est.) Industries: sugar processing, tourism, cotton, salt, copra, clothing, footwear, beverages Electricity - production: 85 million kWh (1998) Electricity - production by source: fossil fuel: 100% hydro: 0% nuclear: 0% other: 0% (1998) Electricity - consumption: 79 million kWh (1998) Electricity - exports: 0 kWh (1998) Electricity - imports: 0 kWh (1998) Agriculture - products: sugarcane, rice, yams, vegetables, bananas; fish Exports: $42 million (1998) Exports - commodities: machinery, food, electronics, beverages, tobacco Exports - partners: United States 68.5%, United Kingdom 22.3%, Caricom countries 5.5% (1995 est.) Imports: $160 million (1998) Imports - commodities: machinery, manufactures, food, fuels Imports - partners: United States 42.4%, Caricom countries 17.2%, United Kingdom 11.3% (1995 est.) Debt - external: $62 million (1997) Economic aid - recipient: $5.5 million (1995) Currency: 1 East Caribbean dollar (EC$) = 100 cents Exchange rates: East Caribbean dollars (EC$) per US$1 - 2.7000 (fixed rate since 1976) Fiscal year: calendar year