St. Vincent & the Grenadines Country Statistics

LOCATION

St. Vincent and the Grenadines are in the Lesser Antilles in the Caribbean. The main island, St. Vincent, is 20 miles (32 km) southwest of St. Lucia and 100 miles (160 km) west of Barbados. The Grenadines stretches southward from St. Vincent toward Grenada, which is 85 miles (137 km) south of the main island.

ECONOMY

In the wake the 2007-2008 global financial crisis, economic activity in St. Vincent and the Grenadines struggled to return to pre-crisis levels. Between 2010 and 2019, real GDP expanded by an average of 0.7 percent, down markedly from 3.8 percent between 2000 and 2009. In December 2016, the country’s tourism sector suffered a major setback, with the closure of the Buccament Bay Resort, due to financial challenges. The resort is the largest hotel on the main island. There are plans to restore the operations of the hotel via sale to interested investors. However, a final agreement has been elusive thus far. In January 2020, the government confirmed the collapse of negotiations between two local investors, seeking to take control of the hotel and KPMG, the resort’s manager in bankruptcy. Nevertheless, the government remains confident that a new investor for the resort will be found. The country is also encouraging investment in other sectors, as it seeks to diversify the economy. In 2019, government signed an agreement with Jamaica-based Rainforest Seafood to build a $9 million seafood-processing facility near the Argyle International Airport.

According to the Eastern Caribbean Central Bank, the hotels and restaurants sector, which is used as a proxy for the tourism sector, contributed on average, 2 percent of GDP over the last five years. Looking at other sectors, the wholesale and retail trade sector contributed 13 percent of GDP, while the transport, storage and communications industry accounted for 13.7 percent. During the same period, the real estate, renting and business activities sector provided 14.9 percent of GDP. Construction and financial intermediation contributed 7.8 percent and 6.8 percent, respectively.

Despite growth of 12.1 percent in the tourism sector, real GDP expanded by only 0.3 percent in 2019, a significant deceleration from the 2.2 percent recorded in the preceding year. The gains in the tourism sector were mainly provided by a 6.5 percent increase in stay-over tourist arrivals, with increased visitors from all major markets. The strongest performance was registered in the US and Canadian markets, as arrivals from those jurisdictions increased by 12.5 percent and 6.6 percent, respectively. Cruise passenger arrivals expanded by 17.1 percent, while yacht passengers rose by 9.2 percent during the period. Increased activity in the tourism sector provided some stimulus for other sectors, with the transport, storage and communications industry growing by 1.9 percent, financial intermediation expanding by 1.7 percent and real estate renting and business activities experiencing growth of 1.2 percent. However, these positive performances were almost totally offset by contractions in other key sectors including, construction, manufacturing and agriculture.

With expenditure expanding at a faster rate than revenue, the overall fiscal deficit widened to 3 percent of GDP in 2019 from 1.6 percent a year earlier. In 2019, current revenue increased by only 0.7 percent, while current expenditure rose by 4.9 percent, with greater spending on wages and salaries and transfers. Additionally, capital spending grew by 24.2 percent to facilitate ongoing work on major projects including, the geothermal plant and upgrades to schools and the road network. Although the absolute value of public sector debt increased by 1.7 percent, it remained at 75.5 percent of GDP.

The COVID-19 pandemic has imposed severe challenges on the country. The tourism sector experienced mass cancellations in early 2020, as was the case for most Caribbean destinations. There is also evidence that suggests a slowing of construction sector activity during the period. Further, the need for Government to cushion the effects of the virus, has placed additional pressure on the country’s fiscal accounts. At the end of April 2020, the IMF approved US$16 million in emergency funding to help the country deal with the challenges related to the pandemic. With a vaccine yet to be developed, the continued global spread of the virus represents a major downside risk for the international tourism industry and the global economy in its entirety. Against this backdrop, the performance of the St. Vincent and the Grenadines economy may be subdued heading into 2021.