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- GDP (PPP):
- $2.1 billion
- -1.5% growth
- -0.4% 5-year compound annual growth
- $12,730 per capita
- Inflation (CPI):
- FDI Inflow:
Saint Lucia’s economic freedom score is 70.2, making its economy the 35th freest in the 2015 Index. Its score has decreased by 0.5 point since last year, reflecting considerable declines in business freedom and labor freedom that outweigh modest improvements in five other economic freedoms. Saint Lucia is ranked 3rd out of 29 countries in the South and Central America/Caribbean region, and its overall score is above the world average.
Saint Lucia’s successful tourism industry depends in part on the country’s commitment to economic freedom and a competitive business environment. Over the past five years, advances in five of the 10 economic freedoms, including a particularly large advance in investment freedom, have been more than offset by sizeable declines in the control of government spending, business freedom, and labor freedom. If this downward trend is not reversed, Saint Lucia could fall into the “moderately free” category.
There is plenty of room for policy improvements. With high tariffs, Saint Lucia remains relatively closed to international trade, and new laws require some approval for investments. Financial freedom is far less than some other Caribbean islands provide.
In late 2011, 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 Community of Latin American and Caribbean States (CELAC) and the Caribbean Community (CARICOM) and home to the Organization of Eastern Caribbean States. The economy depends primarily on tourism (65 percent of GDP), banana production, and a diversified light manufacturing sector. An educated workforce and reliable infrastructure and port facilities attract foreign investment in tourism, petroleum storage, and transshipment. A decline in tourism that began during the recession in 2009, fluctuations in banana prices, and reduced European Union banana trade preferences have forced greater economic diversification in cocoa, mangos, and avocados. Violent crime threatens the tourism industry.
Saint Lucia has low levels of corruption, although the prime minister was criticized in 2013 for having signed an allegedly unlawful contract with a Texas-based oil exploration company. Access to information is legally guaranteed, and government officials are required to report their financial assets annually to the Integrity Commission. The judicial system is independent and conducts generally fair public trials.
The top individual and corporate income tax rates are 30 percent. Other taxes include a tax on consumption and a property transfer tax. The overall tax burden is equal to 20.8 percent of domestic income. Government spending is equivalent to 33.8 percent of gross domestic product, and public debt equals approximately 80 percent of the size of the economy.
The pace of reform has slowed, but business start-up procedures remain relatively straightforward, with no minimum capital required. A well-functioning labor market has not been fully developed, and much of the labor force is employed in agriculture and tourism. In 2014, the government removed sugar subsidies altogether and increased state-controlled fuel prices to reduce budgetary pressures.
Saint Lucia’s average tariff rate is 9.0 percent. Some agricultural imports face additional barriers. The government screens new foreign investment, and investment in some sectors of the economy is restricted. The developing financial system is dominated by banking. Credit to the private sector has been expanding slowly, but a rise in the number of nonperforming loans deters new lending.