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- GDP (PPP):
- $1.2 billion
- 1.6% growth
- 1.0% 5-year compound annual growth
- $10,956 per capita
- Inflation (CPI):
- FDI Inflow:
Saint Vincent and the Grenadines performs relatively well in some fundamental aspects of economic freedom: flexible regulations, an efficient legal system that secures private property, and macroeconomic stability. Tourism is the primary driver of the economy and the main draw for foreign investment.
More vibrant entrepreneurial activity remains stifled by limited access to financing in an underdeveloped financial environment and by inefficient open-market policies that impede trade and international investment. Fiscal policy is constrained by rising public debt and an uncompetitive tax regime. The challenging global economic environment makes external borrowing for long-term projects like the construction of a new airport more challenging.
Saint Vincent and the Grenadines became an independent parliamentary democracy in 1979. Prime Minister Ralph Gonsalves, in office since 2001, was reelected to a fourth term when his center-left Unity Labour Party won the most recent election in December 2015. The country is a member of the Caribbean Community, the Venezuela-led Bolivarian Alliance for the Peoples of Our America, and the Organization of Eastern Caribbean States. Exports benefit from the Caribbean Basin Initiative, which provides duty-free access to the U.S. market. Agriculture and tourism employ a significant portion of the workforce, but formal-sector unemployment is high. The economy is vulnerable to global price fluctuations and natural disasters.
Saint Vincent and the Grenadines’ relatively independent and efficient judicial system, based on English common law, protects property rights and enforces contracts. Enforcement of intellectual property rights statutes, however, has been viewed as generally weak. In comparison with some of its neighbors, the rule of law remains strong and corruption is not pervasive, although drug-related money laundering has been a problem.
The top personal income and corporate tax rates are 32.5 percent. Other taxes include a property tax and a value-added tax. The overall tax burden equals 23.9 percent of total domestic income. Government spending has amounted to 30.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.7 percent of GDP. Public debt is equivalent to 73.6 percent of GDP.
Operation of a private enterprise is not burdened by excessive government interference, and enforcement of commercial regulations is relatively effective. Much of the labor force is employed in the agricultural and tourism sectors. The nonsalary cost of employing a worker is moderate. In 2015, the IMF estimated that limiting subsidies and transfers to state-owned enterprises during the 2015–2019 period would save more than 3 percent of GDP.
Trade is important to Saint Vincent and the Grenadines’ economy; the value of exports and imports taken together equals 78 percent of GDP. The average applied tariff rate is 12.4 percent. In general, foreign and domestic investors are treated equally under the law, but foreign investment is screened by the government. Businesses lack adequate access to a wide variety of financing instruments, and the capital market is underdeveloped.