St. Lucia Country Statistics

LOCATION

Saint Lucia is in the Lesser Antilles in the Eastern Caribbean and is part of the Windward Islands. It lies 54 miles (87 km) south of Martinique and 66.5 miles (107 km) northeast of the island of St. Vincent.

ECONOMY

In the second half of the 2000s, St. Lucia was enjoying an investment boom in the tourism sector, on which the island is heavily reliant. However, this was suddenly ended by the global financial crisis, which began in 2007. As the level of foreign direct investment to emerging economies shrank, the country was confronted by rising non-performing loans in the banking sector as real GDP fell. Further, the initiatives adopted by the government to cushion the domestic economy against the impact of the crisis, caused the fiscal balance to deteriorate and public debt to rise significantly. Even as the world is now facing a new crisis in the form of the COVID-19 pandemic, the lingering effects of the financial crisis are still reflected in the performance of the country’s economy. In the ten years leading up to the crisis, St. Lucia’s economy expended by an annual average of 2.4 percent. However, in the ten years after the event, growth has averaged only 0.9 percent, notwithstanding favourable external conditions, including in key source tourism markets. According to the IMF, the subdued growth was reflective of competition in the regional tourism market and capacity constraints related to low levels of new private investment in the sector.

The tourism sector, as measured by the output from hotels and restaurants, was responsible for 11 percent of the island’s GDP over the last five years. The transportation, storage and communication industry accounted for 20 percent of GDP, while real estate, renting and business activities contributed 22 percent. The contribution of wholesale and retail trade, construction and the financial sector ranged from 6 percent to 8 percent.

The main impetus for growth in 2019 was provided by the tourism sector, which expanded by 4.1 percent according to the Caribbean Development Bank (CDB). This performance was based on a 7.3 percent increase in stay-over arrivals, with greater arrivals from all major markets. Arrivals from the largest market, the US, accounted for 45 percent of the total and expanded by 9.5 percent, compared to 2018 figures. The total number of visitors from Canada and Europe expanded by 1.6 percent and 5.2 percent, respectively. The number of cruise passenger arrivals increased by 3.5 percent. The spill-over effects from upbeat activity in the tourism sector, contributed to the 2.2 percent expansion in wholesale and retail trade and the 3.1 percent growth in transport and storage. By comparison, the 0.7 percent increase in activity in the financial sector was less impressive but encouraging, considering the 4.2 percent decline the sector suffered in 2018. The construction and agriculture sectors contracted by 7.4 percent and 5.9 percent, respectively. Overall, economic activity is estimated to have increased by 1.5 percent in 2019, slightly above the 1.1 percent recorded in the previous year.

Despite the slight acceleration in growth, St. Lucia experienced a small deterioration in its fiscal accounts, as public debt rose from 64.3 percent of GDP to 64.9 percent in 2019. Additionally, the fiscal deficit increased from 2.2 percent of GDP to 2.7 percent of GDP. In 2019, there was a 0.8 percent decline in current revenue, as a sharp drop in receipts from the Citizenship by Investment (CBI) programme outweighed the increase in tax revenue. On the other hand, total expenditure expanded by 1.9 percent, with current spending rising by 2.5 percent and capital outlays unchanged.

As is the case for all global economies, the COVID-19 pandemic seems set to wipe away most, if not all the economic gains envisaged for St. Lucia in 2020. The tourism sector, which experienced a 0.8 percent increase in stay-over arrivals during the first two months of the year, recorded a deep contraction in the following four months, due to global travels restrictions. At the same time, government was faced with mounting fiscal pressures, as it was forced to take measures to cushion the effect of the virus on the economy and the most vulnerable in society. At the end of April 2020, the IMF approved US$29.2 million in emergency funding to help the country deal with the challenges related to the pandemic.