Economy of Saint Lucia - Overview

Overview

St. Lucia's economy depends primarily on revenue from tourism and banana production, with some contribution from small-scale manufacturing. All sectors of the economy have benefited from infrastructure improvements in roads, communications, water supply, sewerage, and port facilities. These improvements, combined with a stable political environment and educated work force, have attracted foreign investors in several different sectors. Although St. Lucia enjoys a steady flow of investment in tourism, the single most significant foreign investment is Hess Oil's large petroleum storage and transshipment terminal. In addition, the Caribbean Development Bank funded an extensive airport expansion project.

Although banana revenues have helped fund the country's development since the 1960s, the industry is now in a terminal decline, due to competition from lower-cost Latin American banana producers and reduced European Union trade preferences. The country is encouraging farmers to plant crops such as cocoa, mangos, and avocados to diversify its agricultural production and provide jobs for displaced banana workers.

Tourism recovered in 2004, following the post-11 September 2001 recession, and continued to grow in 2005, making up more than 48% of St. Lucia's GDP. The hotel and restaurant industry grew by 6.3% during 2005. Stay-over arrivals increased by 6.5%, and the United States remained the most important market, accounting for 35.4% of these arrivals. Yacht passengers rose by 21.9%. Redeployment of cruise ships, remedial berth construction, and high fuel costs prevented higher growth rates. However, several investors have planned new tourism projects for the island, including a large hotel and resort in the southern part of the island. The global recession has caused a reduction in tourist revenue and foreign investment, significantly slowing growth rates.

St. Lucia's currency is the Eastern Caribbean Dollar (EC$), a regional currency shared among members of the Eastern Caribbean Currency Union (ECCU). The Eastern Caribbean Central Bank (ECCB) issues the EC$, manages monetary policy, and regulates and supervises commercial banking activities in its member countries. The ECCB has kept the EC$ pegged at EC$2.7=U.S. $1.

St. Lucia is a beneficiary of the U.S. Caribbean Basin Initiative and is a member of the Caribbean Community and Common Market (CARICOM). The country hosts the executive secretariat of the Organization of Eastern Caribbean States (OECS).