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Quick Facts
- Population:
- GDP (PPP):
- $1.4 billion
- 0.4% growth
- 1.4% 5-year compound annual growth
- $12,983 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
Saint Vincent and the Grenadines’ economic freedom score is 66.3, making its economy the 59th freest in the 2021 Index. Its overall score has decreased by 0.5 point, primarily because of a decline in trade freedom. Saint Vincent and the Grenadines 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 Vincent and the Grenadines has been considered moderately free ever since its first inclusion in the Index in 2009. Economic freedom could be expanded if protection of property rights was strengthened and the government permitted greater access to financing and more openness to trade. Establishment of a specialized national anticorruption agency would improve government integrity.
IMPACT OF COVID-19: As of December 1, 2020, no deaths had been attributed to the pandemic in Saint Vincent and the Grenadines, but the economy was forecast to contract by 7.0 percent for the year.
Background
Situated in the Windward Islands of the Lesser Antilles, Saint Vincent and the Grenadines gained full independence from the United Kingdom as a parliamentary democracy in 1979. Prime Minister Ralph Gonsalves of the leftist Unity Labour Party has been in office continuously since 2001 and won a fifth mandate as a result of November 2020 elections. He is one of the few Western Hemisphere leaders to maintain support for Nicolás Maduro’s government in Venezuela. Agriculture and tourism employ a significant portion of the workforce. Although the economy remains vulnerable to global price fluctuations and natural disasters, it has grown modestly in recent years as a result of renewed growth in construction and increased tourist arrivals at the country’s new international airport.
Saint Vincent and the Grenadines’ relatively independent and efficient judicial system, based on English common law, protects property rights and enforces contracts. Property registration is time-consuming and expensive. In comparison with some of its neighbors, the rule of law remains strong, and corruption is not pervasive. However, compliance with anticorruption institutions is usually slow.
The top individual income and corporate tax rates are 30 percent. Other taxes include property and value-added taxes. The overall tax burden equals 26.7 percent of total domestic income. Government spending has amounted to 30.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.2 percent of GDP. Public debt is equivalent to 70.5 percent of GDP.
Saint Vincent and the Grenadines’ business freedom has declined in recent years in comparison with the world’s more reform-minded countries. In general, however, clearly defined labor laws are enforced effectively. The non-salary cost of employing a worker is moderate. According to the World Bank, subsidies and transfers account for more than 23 percent of the government’s budget.
Saint Vincent and the Grenadines has two preferential trade agreements in force. The trade-weighted average tariff rate is 13.6 percent, and nontariff barriers further undermine overall trade freedom. In general, foreign and domestic investors are treated equally under the law, but the government screens foreign investment. Businesses lack adequate access to a wide variety of financing instruments, and the capital market is underdeveloped.