St Kitts and Nevis - Economy

Overview: St Kitts and Nevis was virtually a sugar monocrop economy until the late 1970s, when the government backed a drive into small-scale industrialisation. Tourism has become the largest source of foreign exchange and the small offshore sector on Nevis has grown rapidly, with around 18,000 companies registered by 1999. The Ross University School of Veterinary Medicine of the USA has an offshore campus on St Kitts, and Berne University – a US postgraduate distance-learning organisation, with administrative offices in Pennsylvania, USA – has had a campus on Nevis since 1992.

Despite the challenges of industrial diversification at such small scale, electronics assembly, food-processing, and beverages and clothing production have been developed, and by the 2000s sugar production only accounted for 20% of GDP. Hurricane damage – especially in 1995, 1998 and 1999 – and pests, fires and labour disputes have affected sugar production, and the crop has reduced since the mid-1990s.

Foreign debt rose rapidly from the mid-1990s, in large measure due to the consequences of five hurricanes in five years. After good growth of 6.5% in 2000, the economy hardly grew in 2001–03, reflecting the downturn in the USA and consequent fall in tourism, but there was investment in new tourist resorts and golf courses, and it picked up with growth of over 7% in 2004, at least 4% p.a. 2005–06 and 3.3% in 2007. Following closure of the sugar industry in 2005, the government initiated a programme of diversification.

Trade: The main trading partners are the USA, the UK and Canada (for exports) and the USA, Italy, and Trinidad and Tobago (for imports).
From 2007, when the Cotonou Agreement between the European Union and the ACP grouping of developing countries came to an end, negotiations proceeded on a series of regional Economic Partnership Agreements, to replace the preferential trade agreements of the Cotonou Agreement with WTO-compliant free-trade areas.