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- GDP (PPP):
- $2.1 billion
- 0.2% growth
- 1.9% 5-year compound annual growth
- $12,607 per capita
- Inflation (CPI):
- FDI Inflow:
Saint Lucia’s economic freedom score is 70.4, making its economy the 32nd freest in the 2013 Index. Its score is 0.9 point worse than last year due to declines in labor freedom, the control of government spending, and monetary freedom. Saint Lucia is ranked 2nd out of 29 countries in the South and Central America/Caribbean region, and its overall score is above the world average.
The Saint Lucian economy performs quite competitively in most aspects of economic freedom. The economic system is characterized by flexible regulations, an efficient legal system that secures private property, and macroeconomic stability. The tourism industry is the primary driver of the economy and the main draw for foreign investment.
The business environment is generally efficient and transparent, and the regulatory framework has become more streamlined. The small financial sector has not suffered any serious impact from the global financial turmoil, but the recession has hurt tourism. Improving access to financing remains critical to generating more broad-based private-sector development. In recent years, expansionary government spending has increased public debt to over 70 percent of GDP.
In late 2011 elections, former Prime Minister Kenny D. Anthony and his Saint Lucia Labour Party defeated Prime Minister Stephenson King’s more business-friendly United Workers Party. Saint Lucia is a member of the Caribbean Community and Common Market and home to the Organization of Eastern Caribbean States. Its economy depends primarily on tourism, banana production, and light manufacturing. An educated workforce and good infrastructure, including roads, communications, water supply, sewerage, and port facilities, attract foreign investment in tourism and petroleum storage and transshipment. Violent crime is often connected to narcotics trafficking. A decline in tourism during the 2009 recession, fluctuations in banana prices, and reduced European Union banana trade preferences have led the government to encourage production in cocoa, mangos, and avocados.
Saint Lucia’s efficient legal system is based on British common law. The judiciary is independent and conducts generally fair public trials. Enforcement of intellectual property rights has been very weak in the absence of an effective legal framework to protect them, and pirated copyrighted material is sold openly with no fear of arrest or prosecution. The government generally maintains effective anti-corruption measures.
The top income and corporate tax rates are 30 percent. Other taxes include a consumption tax and a property transfer tax. The overall tax burden equals 22.5 percent of total domestic income. Government spending has increased to 34.8 percent of GDP, and the deficit has widened to over 7.5 percent of GDP. Public debt has climbed to around 70 percent of total domestic output. Fiscal health fluctuates with changes in commodity prices.
The formation and operation of businesses are not burdened by excessive government interference, and enforcement of commercial regulations is relatively effective and consistent. Business start-up procedures are now more streamlined, although the pace of reform has slowed. A well-functioning labor market has not been fully developed, and much of the labor force is employed in agriculture and tourism. Inflation has been low.
The trade-weighted average tariff rate is high at 9 percent, and non-tariff barriers add to the cost of trade. The investment regime is not fully developed, and long-term foreign direct investment is scarce. Bureaucracy and administrative inefficiency deter investment. A considerable portion of the population does not use the formal banking sector, and access to financing is limited.