St Lucia - Economy

Overview: Although St Lucia’s per capita income is relatively high among developing countries, it has been disadvantaged by its economic dependence on bananas and by its small size, small population, limited physical and human resources, and the frequency of hurricanes.

It has nevertheless successfully exploited opportunities in tourism and small-scale industry, benefiting from trade preferences from the EU and USA, and creating a more diverse economy, with well developed manufacturing, and has substantially reduced its dependence on bananas, production and export prices of which have declined sharply. It has also encouraged development of an offshore financial services sector and a framework of sound regulation has been established.

After steady growth in the late 1990s, the economy stalled in 2000, and was in recession during 2000–02, shrinking by over 4% in 2001, due to the downturn in the USA and consequent fall in tourism and weakening of international markets for manufactures and bananas. In 2003 tourism recovered, with more air services to the island and construction of a new resort, and the economy grew by 5% in 2004, 3.8% in 2005, 5% in 2006 and 3.2% in 2007. Construction activity related to tourism and preparations for the Cricket World Cup helped sustain growth, though by 2007 growth was slower due to the impact of Hurricane Dean in August and a dip in tourist arrivals.

Trade: Bananas are the chief export and the UK and USA the main markets. The main sources of imports are Brazil and the USA.

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.