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Quick Facts
- Population:
- GDP (PPP):
- $2.1 billion
- 1.6% growth
- 0.3% 5-year compound annual growth
- $11,783 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
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Saint Lucia’s economic freedom score is 67.6, making its economy the 51st freest in the 2018 Index. Its overall score has increased by 2.6 points, with significant improvements in fiscal health, government integrity, and trade freedom far outpacing lower scores for the tax burden, business freedom, and monetary freedom indicators. Saint Lucia is ranked 9th among 32 countries in the Americas region, and its overall score is above the regional and world averages.
The economy of Saint Lucia has benefitted from foreign direct investment in such sectors as offshore banking, transshipment, and tourism, attracted by a well-developed legal and commercial infrastructure, an educated workforce, improved roads, an upgraded communications system, port facilities, and a business-friendly entrepreneurial climate. However, high levels of public debt and debt-servicing costs resulting from past expansionary spending have constrained the government, and relatively high tariffs and nontariff barriers limit market openness.
Background
Saint Lucia, an island nation in the Lesser Antilles known for its two distinctive “Piton” mountains, is a two-party democracy with a bicameral parliament. Former Tourism Minister Allen Chastanet of the United Workers Party became president in 2016. Saint Lucia is a member of the Caribbean Community and Common Market and hosts the headquarters of the Organization of Eastern Caribbean States. The economy depends primarily on tourism, banana production, and some light manufacturing. Recent improvements in roads, communications, water supply, sewerage, and port facilities, combined with a well-educated workforce, have attracted foreign investment in tourism and petroleum storage and transshipment. Because of the banana industry’s uncertain future, the government has encouraged farmers to diversify into other crops.
Civil law protects physical property and mortgage claims, but enforcement of intellectual property rights is generally weak. The independent judicial system’s highest court is the Eastern Caribbean Supreme Court, but lower courts are understaffed and slow. Saint Lucia has one of the lowest levels of corruption in the West Indies, but enforcement of anticorruption statutes is not always effective.
The top personal income and corporate tax rates are 30 percent. Other taxes include consumption and property transfer taxes. The overall tax burden equals 25.5 percent of total domestic income. Over the past three years, government spending has amounted to 30.3 percent of total output (GDP), and budget deficits have averaged 3.4 percent of GDP. Public debt is equivalent to 82.9 percent of GDP.
The regulatory environment in Saint Lucia is relatively streamlined and efficient. Application of existing labor codes is uneven because of insufficient resources for investigation and enforcement. The government eliminated $4 million in the 2017 budget that had been set aside to subsidize rice and sugar.
Trade is extremely important to Saint Lucia’s economy; the combined value of exports and imports equals 101 percent of GDP. The average applied tariff rate is 7.8 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average, but bureaucracy and administrative inefficiency continue be deterrents. The banking sector is fairly limited, and access to financing can be difficult.