North & Central America and Caribbean

Saint Lucia
Last reviewed: 9 February 2009

Country information

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ECONOMY

Basic Economic Facts

Nominal GDP: US$960m (IMF 2007)
Nominal GDP per head: US$5,606 (IMF 2007)
Annual growth: 1.7% (2007 EIU estimate)
Inflation: 7.2% (2008 EIU est)
Major industries: Tourism, construction, light manufacturing (clothing, assembly of electronic components, beverages, corrugated cardboard boxes, lime processing, coconut processing), financial services.
Agricultural products: Bananas, coconuts, vegetables, citrus, root crops, cocoa, nutmeg.
Major trading partners: UK, United States, Trinidad & Tobago, Barbados

St Lucia's economy was traditionally reliant on its agricultural sector. However, the banana industry has declined over the last 10-15 years with the erosion of the ACP countries' preferential access to the EU market and increasing competition from Latin American producers. As in other Windward Island banana producing countries, a large number of farmers have been displaced over this period. Banana exports fell to 30,000 tonnes in 2005 from a peak of 132,000 tonnes in 1992. Nevertheless, St Lucia continues to be the leading Windward Island banana producer, accounting for around half of Windward banana exports in recent years.

In 2006, the country saw a modest recovery in banana production, with growth of 13.2%. This continued into 2007, with year-on-year growth of 34.8% in the first half of the year. However, the banana industry suffered widespread damage when Hurricane Dean passed close to St. Lucia in August. The Windward Islands Crop Insurance scheme (wincrop) will provide compensation to most farmers, although financial losses will still be high as plants take a year to produce fruit. The industry benefits to a limited extent from the strong value of the Euro, which has increased the price in EC-dollar terms, and also from the growing market for fair trade fruit in the UK.

In recent years, tourism has replaced bananas as the main earner of foreign exchange. In addition to land-based tourism, St Lucia is a prime yachting centre and cruise destination. In recent years the number of stayover visitors has been declining from 317,939 in 2005 to 287,407 in 2007 including 79,180 from the United Kingdom. The numbers for 2008 reached 249,785 up to October but the forecast for early 2009 predicts a large drop due to the global financial crisis. Hotels have already started to put staff on rotation with Sandals announcing it is to lay off 210 staff in St Lucia.

Construction activity has slowed down with work stopping on a number of new hotel developments citing difficulty obtaining financing.St Lucia's small manufacturing sector is among the most diverse in the Eastern Caribbean, but is threatened by competition from Trinidad, Jamaica and Barbados. In 2007, GDP growth was 1.7% and the total public-sector debt was 73% of GDP. In an effort to seek an additional source of revenue, the St Lucia Ministry of Finance, in November 2008, established a unit to consider proposals for a value-added tax (VAT).