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- GDP (PPP):
- $1.3 billion
- 0.5% growth
- -0.8% 5-year compound annual growth
- $11,776 per capita
- Inflation (CPI):
- FDI Inflow:
Saint Vincent and the Grenadines’ economic freedom score is 67.0, making its economy the 52nd freest in the 2014 Index. Its score is 0.3 point higher than last year, with improvements in the control of government spending, labor freedom, and freedom from corruption that outweigh declines in trade freedom and business freedom. Saint Vincent and the Grenadines ranks 8th out of 29 countries in the South and Central America/Caribbean region, and its score is above the world average.
Saint Vincent and the Grenadines’ economic freedom was first assessed in the 2009 Index, and its score has advanced since then by about 3 points, with improvements in six of the 10 economic freedoms including investment freedom, the management of public finance, and monetary freedom. The country remains “moderately free” and has achieved its highest economic freedom score ever in the 2014 Index.
By and large, Saint Vincent and the Grenadines has flexible labor regulations, an efficient legal system, and macroeconomic stability. However, tariff and non-tariff barriers undercut trade freedom, and private-sector growth remains stifled by an underdeveloped financial sector.
Prime Minister Ralph Gonsalves’ Unity Labour Party has governed since 2001 and retained a slim majority in the December 2010 parliamentary elections. Saint Vincent and the Grenadines is a parliamentary democracy and part of the British Commonwealth. It is also a member of the Caribbean Community (CARICOM) and the Organization of Eastern Caribbean States. The economy is supported by the U.S. Caribbean Basin Initiative, which allows goods to enter the United States duty-free. Agriculture and tourism employ a significant portion of the workforce, but high formal-sector unemployment has caused many to emigrate. The economy is vulnerable to global price fluctuations and natural disasters. Tourism has not recovered from the 2009 recession, and nearly one-third of all revenue is directed toward servicing the high government debt.
Compared to some neighboring countries, the rule of law remains strong, and corruption is not pervasive. There have been some allegations of money laundering through Saint Vincent banks and drug-related corruption within the government and police, but the government has taken action to prosecute such crimes. The relatively independent and efficient judicial system is based on British common law.
The top individual income tax rate is 32.5 percent, and the top corporate tax rate has risen to 33 percent. Other taxes include a property tax and a value-added tax (VAT). The overall tax burden amounts to 22 percent of the total domestic economy. Public expenditures equal 30 percent of GDP. Government debt equates to about 70 percent of gross domestic income.
It takes seven procedures and about 10 days on average to incorporate a business, and no minimum capital is required. However, modern bankruptcy procedures are not in place. Labor regulations are relatively flexible, but their application is uneven. Several subsidy programs benefit agricultural products such as bananas and state-owned enterprises such as a coconut-water bottling plant.
The average tariff rate in Saint Vincent and the Grenadines is 11.2 percent. Non-tariff barriers to trade are relatively low. A license for foreign investment is required if foreign ownership levels will exceed 50 percent. Foreign investment in land is regulated. The developing financial system is dominated by banks. Capital markets are underdeveloped, and local entrepreneurs lack adequate access to a wide variety of financing instruments.