IMF Executive Board Concludes 2008 Article IV Consultation with St. Lucia.

Macroeconomic performance has been mixed in recent years. While real GDP growth averaged 4 percent during 2003-06, growth slowed to about 1¾ percent in 2007, reflecting contraction in hurricane-affected agriculture (mainly banana exports), and slowdowns in construction activity and stayover tourist arrivals. Inflation increased sharply to almost 7 percent at end-December 2007, due to higher imported fuel and food prices and the ongoing depreciation of the U.S. dollar. With deteriorating global prospects and slow recovery in agriculture, growth is expected to be modest in 2008 (at 2⅓ percent) and to rise further in 2009. Additional hotel capacity, combined with vigorous marketing and more frequent airlift, is expected to boost growth. Despite this broadly positive outlook, vulnerabilities remain, including the country's dependence on imported oil, high food prices, declining European Union (EU) banana preferences, volatile tourism receipts, and exposure to natural disasters.