ECONOMY
St. Kitts and Nevis was the last sugar monoculture in the Eastern Caribbean until the government decided to close the sugar industry following the 2005 harvest after decades of losses at the state-run sugar company. To compensate for the loss of the sugar industry, the Government of St. Kitts and Nevis has embarked on a program to diversify the agricultural sector and stimulate the development of other sectors of the economy.
The economy of St. Kitts and Nevis experienced strong growth for most of the 1990s, but hurricanes in 1998 and 1999 and the September 11, 2001 terrorist attacks hurt the tourism-dependent economy. Economic growth picked up in 2004, with a real GDP growth rate of 6.4%, followed by 4.1% growth in 2005. Tourism has shown the greatest growth and is now a major foreign exchange earner for St. Kitts and Nevis, as evidenced by an 83% increase in foreign direct investment in a range of tourism-related projects. Significant new investment included a 648-room Marriott hotel and convention center that opened in December 2002, as well as other resort projects. In 2006, the economy of St. Kitts and Nevis posted growth of 4.6%, mostly as a result of diversification into tourism and construction related to the Cricket World Cup. The government instituted a program of investment incentives for businesses considering the possibility of locating in St. Kitts or Nevis, encouraging 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.
Consumer prices have risen marginally over the past few years. The rate of inflation, as measured by the change in the CPI, rose on average by 3.6% in 2005, compared with 2.3% in 2004 and 2.2% in 2003.
St. Kitts and Nevis is a member of the Eastern Caribbean Currency Union (ECCU). The Eastern Caribbean Central Bank (ECCB) issues the Eastern Caribbean dollar (EC$) for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries. The ECCB has kept the EC$ pegged at EC$2.7 to U.S. $1.
GDP (2005): $453.0 million.
GDP growth rate (2006): 4.6%.
Per capita GDP (2005): $8,210.
Inflation (2005): 3.6%.
Natural resources: Negligible.
Agriculture: Sugarcane, rice, yams, bananas, fish, cotton, peanuts, vegetables.
Industry: Financial and business services, tourism, construction, clothing, footwear, beverages, and tobacco.
Trade (2005): Exports--$34 million (merchandise) and $139 million (commercial services). Major markets--United States (91.9%), EU (3.0%), Trinidad and Tobago (2%), Netherlands Antilles (0.8%), St. Vincent and the Grenadines (0.3%). Imports--$210 million (merchandise) and $87 million (commercial services). Major suppliers--United States (57.9%), Trinidad and Tobago (14.1%), European Union (9.3%), Japan (3.8%), and Barbados (2.8%).
Official exchange rate: EC$2.70 = U.S. $1.
