The economy of Saint Kitts and Nevis

Saint Kitts and Nevis

The Federation of Saint Kitts and Nevis , located in the Leeward Islands, is a federal two-island nation in the West Indies. It is the smallest sovereign state in the Americas, in both area and population....

has traditionally depended on the growing and processing of sugar cane; decreasing world prices have hurt the industry in recent years. Tourism, export-oriented manufacturing, and offshore banking activity have assumed larger roles. Most food is imported. The government has undertaken a program designed to revitalize the faltering sugar sector. It is also working to improve revenue collection in order to better fund social programs. In 1997, some leaders in Nevis

Nevis

Nevis is an island in the Caribbean Sea, located near the northern end of the Lesser Antilles archipelago, about 350 km east-southeast of Puerto Rico and 80 km west of Antigua. The 93 km² island is part of the inner arc of the Leeward Islands chain of the West Indies...

 were urging separation from Saint Kitts

Saint Kitts

Saint Kitts Saint Kitts Saint Kitts (also known more formally as Saint Christopher Island (Saint-Christophe in French) is an island in the West Indies. The west side of the island borders the Caribbean Sea, and the eastern coast faces the Atlantic Ocean...

 on the basis that Nevis was paying far more in taxes than it was receiving in government services, but the vote on cessation failed in August 1998. In late September 1998, Hurricane Georges

Hurricane Georges

Hurricane Georges was a very destructive, powerful and long-lived Cape Verde-type Category 4 hurricane. Georges was the seventh tropical storm, fourth hurricane, and second major hurricane of the 1998 Atlantic hurricane season...

 caused approximately $445 million in damages and limited GDP

Gross domestic product

Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....

 growth for the year.

The economy of St. Kitts and Nevis experienced strong growth for most of the 1990s but hurricanes in 1998 and 1999 contributed to a sharp slowdown

Slowdown

A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. A slowdown may be used as either a prelude or an alternative to a strike, as it is seen as less disruptive as well as less risky and...

. Real economic growth was 0.75 % in 2002 after a decline of 4.3 % in 2001. The economy experienced a mixed performance during 2002, with some sectors experiencing positive growth while others experienced varying levels of decline. The construction sector recorded a 4.51 % decline, manufacturing and hotels and restaurants also recorded significant declines of 4.01 and 9.89 % respectively, and sugar production fell by 5.1 %. Significant new investment in tourism, including a 648-room Marriott hotel and convention center that opened in December 2002, as well as continued government efforts to diversify the economy, are expected to improve economic performance. Consumer prices have risen marginally over the past few years. The inflation rate was 3%-4% for most of the 1990s.

St. Kitts and Nevis is a member of the Eastern Caribbean Currency Union

Eastern Caribbean Currency Union

The Eastern Caribbean Currency Union is a development of the Organization of Eastern Caribbean States, this organization is composed of Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. It is under the supervision of the Eastern Caribbean...

 (ECCU) The Eastern Caribbean Central Bank

Eastern Caribbean Central Bank

The Eastern Caribbean Central Bank is the monetary authority of a group of six independent Caribbean nations namely:* Antigua and Barbuda,* Grenada,* Saint Kitts and Nevis,* Commonwealth of Dominica,* Saint Lucia,* Saint Vincent and the Grenadines,...

 (ECCB) issues a common currency (the East Caribbean dollar

East Caribbean dollar

The East Caribbean dollar is the currency of eight of the nine members of the Organisation of Eastern Caribbean States...

) for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries.

St. Kitts is a member of the Eastern Caribbean Telecommunications (ECTEL) authority, which is developing the regulations to liberalize the telecommunications sector in the region by 2004.

Agriculture

Of the islands' total land area, about 39% is devoted to crops. The principal agricultural product of St. Kitts is sugarcane; peanuts are now the second crop. On Nevis, sea island cotton and coconuts are the major commodities. Sweet potatoes, onions, tomatoes, cabbages, carrots, and breadfruit are grown for local consumption on both islands, mostly by individual smallholders. In 2001, agricultural products accounted for about 18.5% of total imports by value and 11.2% of exports; the government has embarked on a program to substitute for food imports.

Sugar estate lands were nationalized in 1975, and the sugar factory was purchased by the government the following year. The output of raw sugar slumped between 1986 and 1989, and as a result the government entered into a management agreement with Booke and Tate of Great Britain in August 1991; a World Bank loan of US$1.9 million was utilized to provide financial stability. Sugar production in 1999 was estimated at 197,000 tons. Faced with a sugar industry that was finding it increasingly difficult to earn a profit, the Government of St. Kitts and Nevis embarked on a program to diversify the agricultural

Agriculture

Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...

 sector and stimulate the development of other sectors of the economy, particularly tourism. In July 2005, sugar production ceased.

Animal husbandry

Pasture areas are small, covering some 2.7% of the islands. Pangola and Bermuda grasses provide the bulk of the fodder. Estimates of livestock in 2001 were sheep, 14,000; goats, 14,400; cattle, 4,300 head; and pigs, 4,000.

Fishing

Fishing is a traditional occupation that has not expanded to any great extent; the catch in 2000 was 257 tons (down from 620 tons in 1990). Some exports (primarily lobsters) are made to the Netherlands Antilles and Puerto Rico; fisheries exports totaled US$245,000 in 2000. Fish is caught by traditional methods such as beach-seining, pot and trap fishing & hand-lining. The catch is not enough to satisfy local demand for fish. Large quantities of dried, salted and smoked fish, as well as frozen are imported from Canada and USA.

Forestry

Both islands have small stands of virgin tropical forest, with palms, poincianas, and palmettos. About 11% of the land area consists of forests. Imports of forest products nearly reached US$1.8 million in 2000.

Mining

The mining sector played a minor role in St. Kitts and Nevis. No commercially valuable mineral deposits have been found on Saint Kitts. Hence mining and quarrying activities are limited to earthen materials. Presently, there is only one quarry on St. Kitts and there are quarries on Nevis. Raking of salt, the country's fourth-leading industry, was done from time to time. Local quarrying of some materials was used to supplement the construction industry. In 2000, output for sand and gravel was 214,700 tons, up from 50,389 in 1996; crushed stone output was 121,226 tons.

Secondary industries

Industry accounted for 26% of GDP in 2001. The principal manufacturing plant and largest industrial employer is the St. Kitts Sugar Manufacturing Corp., a government enterprise; it grinds and processes sugarcane for export. A brewery on St. Kitts makes beer for local consumption, and cotton is ginned and baled on Nevis. Electronic plants produce switches, calculators, car radios, and pocket radios. Other industries are clothing and shoe manufacturing. These provide a much-needed alternative to agricultural employment, particularly for women.

The manufacturing suffered a decline in 1998 due to Hurricane Georges. As a result of diversification and expansion, St. Kitts and Nevis has transformed small electronics plants into the largest electronics assembly industry in the Eastern Caribbean. Its apparel assembly industry has also become very successful in recent years. Garment manufacturing has expanded since the mid-1990s and now accounts for a large share of export earnings. Upgrading the Port Zante harbor complex in Basseterre enables large container ships to call, further enhancing St. Kitts' attractiveness as an offshore manufacturing base. Manufactured exports were valued at US$20 million in 1998 and 1999, suggesting that this sector was the least affected by hurricane damage.

There were four major industrial sites in St. Kitts and Nevis in 2000: C. A. Paul Southwell Industrial Park, Bourkes Industrial Estate, Canada Industrial Estate, and Prospect Industrial Estate. Port Zante is the main seaport.

Tourism

This sector was badly hit by the effects of the hurricanes in 1998 and 1999. The country had just started to rebuild after Georges in 1998 when Lenny created substantial damage in 1999. The Port Zante complex, where the pier and terminal buildings are located, suffered serious damage. In Nevis, the only large hotel was forced to close for 6 months, resulting in lay-offs of staff (although many were employed to re-landscape devastated gardens) and decreased government revenue. Overall visitor arrivals, both of those staying over and those on cruise ship calls, fell about 15 percent in 1999, with a resulting decrease in visitor expenditure from the 1998 figure of US$75.7 million.

At a Glance

GDP:
purchasing power parity

Purchasing power parity

In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...

 - $726 million (2006 est.)

GDP - real growth rate:
6% (2007 est.)

GDP - per capita:
purchasing power parity - $8,200 (2005 est.)

GDP - composition by sector:
agriculture:
3.5%
industry:
25.8%
services:
70.7%(2001)

Inflation

Inflation

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 rate (consumer prices):
8.7% (2005 est.)

Labor force:
18,172 (June 1995)

Unemployment rate:
4.5% (1997)

Budget:
revenues:
$64.1 million

expenditures:
$73.3 million, including capital expenditures of $10.4 million (1997 est.)

Industries:
sugar processing, tourism, cotton

Cotton

Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....

, salt

Salt

In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...

, copra

Copra

Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...

, clothing, footwear, beverages

Electricity - production:
125 million kWh (2005)

Electricity - production by source:
fossil fuel:
100%
hydro:
0%
nuclear:
0%
other:
0% (1998)

Electricity - consumption:
116.3 million kWh (2005)

Electricity - exports:
0 kWh (2005)

Electricity - imports:
0 kWh (2005)

Agriculture - products:
sugarcane

Sugarcane

Sugarcane refers to any of six to 37 species of tall perennial grasses of the genus Saccharum . Native to the warm temperate to tropical regions of South Asia, they have stout, jointed, fibrous stalks that are rich in sugar, and measure two to six metres tall...

, rice

Rice

Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...

, yams

Yam (vegetable)

Yam is the common name for some species in the genus Dioscorea . These are perennial herbaceous vines cultivated for the consumption of their starchy tubers in Africa, Asia, Latin America and Oceania...

, vegetable

Vegetable

The noun vegetable usually means an edible plant or part of a plant other than a sweet fruit or seed. This typically means the leaf, stem, or root of a plant....

s, banana

Banana

Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....

s; fish

Fish

Fish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish, as well as various extinct related groups...

Exports:
$42 million (1998)

Exports - commodities:
machinery, food, electronics, beverages, tobacco

Tobacco

Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...

Exports - partners:
US 61.9%, Canada 9.4%, Netherlands 6.6%, Azerbaijan 5% (2006)

Imports:
$383 million (2006)

Imports - commodities:
machinery, manufactures, food, fuels

Imports - partners:
US 49.5%, Trinidad and Tobago 13.3%, UK 4.5% (2006)

Debt - external:
$314 million (2004)

Economic aid - recipient:
$3.52 million (2005)

Currency

Currency

In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

:
1 East Caribbean dollar

East Caribbean dollar

The East Caribbean dollar is the currency of eight of the nine members of the Organisation of Eastern Caribbean States...

 (EC$) = 100 cents

Exchange rates:
East Caribbean dollars per US dollar - 2.7 (2007), 2.7 (2006), 2.7 (2005), 2.7 (2004), 2.7 (2003)

Fiscal year:
calendar year