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- GDP (PPP):
- $1.3 billion
- -0.4% growth
- -0.4% 5-year compound annual growth
- $11,491 per capita
- Inflation (CPI):
- FDI Inflow:
Saint Vincent and the Grenadines’ economic freedom score is 66.7, making its economy the 54th freest in the 2013 Index. Its score is 0.2 point higher than last year, with improvements in the control of government spending and fiscal freedom outweighing a substantial deterioration in freedom from corruption. Saint Vincent and the Grenadines ranks 11th out of 29 countries in the South and Central America/Caribbean region, and its score is well above the regional average.
The economy of Saint Vincent and the Grenadines continues to be “moderately free.” It performs above the world averages in rule of law and regulatory efficiency. Long benefitting from a relatively well-developed legal and commercial infrastructure, the tourism sector has attracted considerable foreign investment over the past decade.
By and large, open-market policies are not firmly institutionalized. Tariff and non-tariff barriers undercut trade freedom, and the investment regime lacks efficiency. More broad-based economic development beyond tourism and agriculture continues to be undermined by the undeveloped financial sector and the lack of long-term financing mechanisms. Despite some progress, the management of public finance remains poor, and the public debt burden has reached over 70 percent of GDP.
Prime Minister Ralph Gonsalves’ Unity Labour Party, which has governed since 2001, retained a slim majority in December 2010 parliamentary elections. Saint Vincent and the Grenadines is part of the British Commonwealth and is a member of CARICOM and the Organization of Eastern Caribbean States. Many of its goods enter the United States duty-free under the U.S. Caribbean Basin Initiative. Banana production and tourism employ most of the workforce, but very high formal-sector unemployment has caused many to emigrate. The economy is vulnerable to global price fluctuations, natural disasters, and reduced European Union trade preferences for bananas. Tourism has not recovered from the recession of 2009. Nearly one-third of all revenue is directed toward servicing the government debt.
Saint Vincent and the Grenadines’ judicial system is based on British common law. The judiciary is relatively independent and efficient, providing generally fair public trials. In comparison with other countries in the region, the rule of law remains strong, and corruption is not pervasive in the economy. The law provides criminal penalties for official corruption, but enforcement is not always effective.
The top income and corporate tax rates are 32.5 percent. Other taxes include a property tax and a value-added tax (VAT). The overall tax burden equals 21.6 percent of total domestic income. Government spending is equivalent to 33.1 percent of GDP. With the budget balance in deficit, the public debt has climbed to over 70 percent of GDP. State finances have been constrained this year by lower-than-expected tax revenues.
Establishing a business is neither time-consuming nor costly, although licensing requirements remain burdensome. There is no minimum capital requirement, and it takes only 10 days and seven procedures to start a business. Modern bankruptcy procedures are not in place. Labor regulations are relatively flexible, but their application is uneven. Inflation has been low.
The trade-weighted average tariff rate is high at 8.4 percent, and non-tariff barriers further constrain trade freedom. Investment-related regulations and laws are complex and non-transparent, deterring prospects for attracting new investment. The developing financial system is dominated by banks. Credit to the private sector has been expanding slowly, but a rise in the number of non-performing loans deters new lending.