Economic Survey of the Caribbean 2007-2008

According to the survey the economies of the ECCU continued to show positive growth for the sixth consecutive year. In 2007, preliminary data indicated that growth slowed to 5.2% from 6.3% in 2006 as many public and private construction activities geared towards the CWC were completed. In addition there was a significant contraction in the tourism sector, which actually declined by 0.6% in 2007 compared to 6% in 2006. Fuelled by hikes in oil and food prices, especially in the last quarter of 2007, the rate of inflation increased to 6.1% from 1.3% in 2006 and is expected to continue on an upward trend in 2008. Economic growth will continue to slow but remain positive in 2008, projected at 3.8%, mainly influenced by the slowdown in the United States economy and rising international oil, food and other commodity prices.

In 2007 growth was strongest in Anguilla (21%), St Vincent and the Grenadines (6.9%) and Antigua and Barbuda (6.9%) while Hurricane Dean, which struck in August 2007, negatively impacted on the growth rates of Saint Lucia (1.7% compared to 4.9% in 2006) and Dominica (1.8% compared to 3.8% in 2006). Despite the challenge of continuous volcanic activity in Montserrat, the economy grew by 2.8% compared to negative growth of 3.8% in 2006. Intermediate growth of 3% was recorded in both St Kitts and Nevis while growth in Grenada was 4.4%. The main impetus of growth continued to be the construction sector with spill over effects into mining and quarrying, transportation and communication, electricity and water and banks and insurance. Construction activity will remain robust in 2008 driven by the private sector and the Public Sector Investment Programme (PSIP). 
Source: UN ECLAC 

OECS Country Profile 2008: St. Kitts and Nevis 

Tourism
St Kitts and Nevis is an upper-middle-income country, with GDP per head estimated at US$8,411 in 2007. Strong growth in the mid-1990s, mainly as a result of tourism development, was curtailed by a series of damaging
hurricanes in 1997-99. Economic growth recovered in 2000, but the economy was negatively affected as international demand for tourism dipped in 2001-03. The tourism sector has rebounded since 2004, resulting in average annual real GDP growth of 4.7%. Growth is estimated to have slowed slightly in 2007, to 3.1%, as construction demand slowed following a spike in 2006.

Tourism is the major source of foreign-exchange earnings and the economy"s most promising growth area, with several large hotels recently completed, enlarged or reopened, and others planned. There were 117,300 stopover arrivals on the two islands in 2007, nearly two-thirds of which were tourists from the US, one-quarter from the rest of the Caribbean, and around 5% from Canada. There were also over 251,000 cruise-ship passenger arrivals in 2007, well above levels in the two previous years.

Financial Sector
Nevis has a growing offshore financial sector, which in 2007 included more than 30,000 international business companies, nearly 10,000 limited liability companies, and 3,600 international trusts.
Source: Economist Intelligence Unit (EIU)

The Economic Performance for 2006

Sourced from The St.Kitts 2007 Budget, The ECCB 2006 Economic Review, Eastern Caribbean Currency Union: Selected Issues

St. Kitts and Nevis deceased sugar-cane production in 2005, their once long-time mainstay contributor to the economy’s development, became too uncontainable due to high operational costs. Despite this recent event, the country has been able to maintain a good standing in terms of development. Estimates from the 2007 Budget indicate that real GDP expanded by 4.6% in 2006. Manufacturing, Construction, and Tourism were the leading sectors of relevance to GDP contribution, as the country initiated their diversification process.

The construction sector, like most CWC 2007 venue countries, experienced highlighted expansion by 5.7%, where the Warner Park Stadium, Homes, Private and Public Sector projects have been on the rise. This high-level construction activity had a positive impact on other sectors of domestic output, such as the manufacturing sector. Due to construction activities, there was an increase in the production of blocks and pre-mixed concrete. The advancement of beverage and electronic component output was based on higher external demands.

The facilitation for sugar-crop workers was one of the government’s main priorities for 2006, as the Prime Minister ensured the availability and accessibility to non-sugar agriculture was present. The current strategy for agricultural development is to focus on the growth of commercial farms for both crop and livestock production. The Prime Minister declared in his 2007 budget speech, “The Agricultural Sector has the potential to assist with job creation and income generation particularly for those former sugar industry workers…”

Having picked up from the first half of the year, tourism receipts to the current account grew by 7% to $296.6 million dollars. This sector is expected to expand in response to increased accommodation infrastructure, additional airlift and marketing.

The economy must be further recognized for their resilience in 2006, especially in the wake of increasing international oil prices, and the number of capital projects implemented in the year. The aim for 2007 is therefore to reduce the reliance of fossil fuels by formulating different ways to exploit abundant renewable sources such as biomass, ocean, wind, geothermal sources, solar radiation and domestic waste.