CALIBAN

The economy of St. Kitts-Nevis is rebounding from a series of adverse shocks over recent years that included three major hurricanes and a decline in tourism following the 9/11 attacks in the United States. According to an International Monetary Fund Executive Board staff report, real GDP growth exceeded 6 percent in 2004, and is projected to approach 5 percent for 2005. Tourism surged since 2003 thanks to favorable global growth as well as large recent investments in infrastructure. A number of new tourism developments were undertaken along with preparations for the 2007 Cricket World Cup, spurring construction activity. Inflation has been contained despite higher oil prices.

Following the closure of the state owned sugar company after the July 2005 harvest, IMF officials expect fiscal balances and growth prospects to strengthen over the medium term. According to the report: “Burdened by high costs, the sugar industry had become a major contributor to the fiscal deficit, with annual losses on the order of 4 percent of GDP, and accumulated debt of about 30 percent of GDP. The situation was only set to worsen with the impending loss of preferential access to EU markets.”

St. Kitts Nevis was recently singled out in Finance and Development along with five other countries (three of which are also in the Caribbean basin) as particularly at risk from the loss of such trade preferences in general.

Labels: Caribbean