Economy of Grenada

Economy of Grenada
GREN-stgeorges-fortfred
CurrencyEast Caribbean dollar (2.7 per US$ fixed rate since 1976)
Trade organisations
CARICOM
Statistics
GDP$1.701 billion (2018 est. PPP)
GDP rank119th (PPP)
GDP growth
6.4% (2015), 3.7% (2016),
4.5% (2017e), 3.3% (2018f) [1]
GDP per capita
$15,749 (2018 est.)
GDP by sector
agriculture: 11%; industry: 20%; services: 69% (2008 est.)
-1.3% (2015 est.)
Population below poverty line
38% (2008 est.) [2]
Labour force
59,900 (2013 est.)
Labour force by occupation
agriculture 11%, industry 20%, services 69% (2008 est.)
Unemployment33.5% (2008 est.)
Main industries
nutmeg, bananas, cocoa, fruit and vegetables, clothing, mace
138th (2017)[3]
External
Exports$43.8 million (2015 est.)
Export goods
nutmeg, bananas, cocoa, fruit and vegetables, clothing, mace
Main export partners
 Nigeria 44.7%
 St. Lucia 10.8%
 Antigua and Barbuda 7.3%
 St. Kitts and Nevis 6.6%
 Dominica 6.6%
 United States 5.8% (2012 est.)[4]
Imports$310.4 million (2015 est.)
Import goods
food, manufactured goods, machinery, chemicals, fuel
Main import partners
 Trinidad and Tobago 49.6%
 United States 16.4% (2015 est.)[5]
 Israel 4.4% (2015 est.)[6]
 EU 2.8% (2015 est.)[7]
Public finances
$538 million (2010)
Revenues$175.3 million (2009 est.)
Expenses$215.9 million (2009 est.)
Economic aid$8.3 million (1995)
B- (Domestic)
B- (Foreign)
BBB- (T&C Assessment)
(Standard & Poor's)[8]

All values, unless otherwise stated, are in US dollars.

Economic Overview

Grenada has a largely tourism-based, small, open economy. Over the past two decades, the economy has shifted from one of agriculture-dominant into that of services-dominant, with tourism serving as the leading foreign currency earning sector. The country's principal export crops are the spices nutmeg and mace (Grenada is the world’s second largest producer of nutmeg after Indonesia). Other crops for export include cocoa, citrus fruits, bananas, cloves, and cinnamon. Manufacturing industries in Grenada operate mostly on a small scale, including production of beverages and other foodstuffs, textiles, and the assembly of electronic components for export.

Economic growth picked up in the late 1990s following slow growth and domestic fiscal adjustment in early years of the decade. Despite an expansionary fiscal policy, the public debt remained moderate at around 50 percent of GDP as deficits were financed partly by privatization receipts. Since 2001, economic growth declined caused by adverse shocks such as a slowdown in the global economy and natural disasters. To deal with the shocks, fiscal policy became more expansionary while privatization receipts declined. As a result, public debt increased sharply to near 110 percent of GDP in 2003. Economic conditions worsened when Hurricane Ivan hit the country in September 2004; progress in fiscal consolidation was impeded as government revenues fell and policy priority was shifted to post-hurricane relief.

Although reconstruction has proceeded quickly with significant aid from the international community, tourism and agricultural activities remain weak and nearly offset the stimulus from the reconstruction boom. The country is still facing the difficult task of reconstruction and recovery, while public debt is unsustainable and the government faces large financing gaps. In the years ahead, reinvigorating growth will be a high priority, and continued efforts are needed to address vulnerabilities.

Economic Performance

After experiencing GDP growth averaging nearly six percent a year in the late 1990s, economic growth declined considerably after 2001 as a result of a decline in the tourism industry following the September 11, 2001, terrorist attacks, and damages caused by several hurricanes.

The economy of Grenada was brought to a near standstill in September 2004 by Hurricane Ivan, which damaged or destroyed 90 percent of the country's buildings, including some tourist facilities. In July 2005 Hurricane Emily struck Grenada again as the country was still recovering from the impact of Hurricane Ivan. Besides the negative impacts to the tourism industry, the two devastating hurricanes destroyed or significantly damaged a large percentage of Grenada’s tree crops, which may take years to recover.

As the damage of Hurricane Ivan to the economy exceeded 200 percent of GDP, economic growth registered a negative growth of three percent in 2004, compared with a positive growth rate of 5.8 percent in 2003. Although signs of recovery have been seen in Grenada after the damage inflicted by Hurricanes Ivan and Emily, economic conditions remain difficult; GDP is projected at a growth rate of only one percent for 2005.

With the absence of sustained growth, the fiscal situation started to deteriorate after 2001 reflecting a continued expansionary policy with sharp increase in spending on social sectors, the wage bill, and goods and services. As a result, the fiscal deficit rose to 8.5 percent of GDP in 2001 from 3.2 percent in 2000. The fiscal situation remained shaky in 2002 with the deficit widening to 19.2 percent of GDP due to dampened output from Tropical Storm Lili. As the economic began to recover in 2003, the government began to take steps for fiscal consolidation, and the fiscal deficit fell to 4.8 percent of GDP. But progress in fiscal consolidation was impeded in 2004 as the government policy changed abruptly to post-hurricane relief. Meanwhile, government revenues decreased as a result of the impact of the hurricanes on the economy.

While economic growth has declined since 2001 due to adverse shocks, including slowdown in the global economy and natural disasters, fiscal policy became more expansionary when privatization receipts declined. As a result, public debt has increased sharply to over 100 percent of GDP since 2002; it remained as high as near 130 percent of GDP in 2004.

Grenada is a member of the Eastern Caribbean Central Bank (ECCB), which manages monetary policy and issues a common currency for all the member countries. Inflation has remained low and stable within the framework of the currency board arrangement, with inflation averaging at two percent over the past 15 years.

Balance of Payments

Grenada's current account balance has remained in large deficit due to its heavy dependence on import of most consumer goods and domestic investment. Following an average deficit of around 44 percent of GDP from 1997 to 2000, the current account deficit has increased to over 35 percent of GDP since 2001 due to higher import demand combined with lower receipts from tourism and nutmeg exports. The current account deficits are financed by inflows of foreign direct investment, official grants and loans, and commercial borrowing by the private sector. Grenada’s economy is vulnerable to external shocks considering its high dependence on tourism, exports, and imports of most of the goods that are consumed or invested domestically. It is also prone to other adverse shocks such as natural disasters.

Regional Situation

In the aftermath of Hurricanes Ivan and Emily, the priority now for Grenada is to continue the recovery process necessary to restore the infrastructure that was devastated by the hurricanes. The international community has disbursed significant amounts of aid, including financial help under the International Monetary Fund's emergency assistance policy for natural disasters and assistance from the World Bank and the Caribbean Development Bank.

In the context of regional economic development, further integration into the Eastern Caribbean regional economy will help enhance Grenada’s competitiveness and increase its scale of economy in production, marketing and distribution.

Statistics

Grenada Export Treemap
Grenada Export Treemap

GDP: purchasing power parity - $1.401 billion (2015 est.)

GDP - real growth rate: 4.6% (2015 est.)

GDP - per capita: purchasing power parity - $13,100 (2015 est.)

GDP - composition by sector: agriculture: 6.2% industry: 14.3% services: 79.5% (2015 est.)

Population below poverty line: 38% (2008 est.)

Household income or consumption by percentage share: lowest 10%: NA% highest 10%: NA%

Inflation rate (consumer prices): 1.3% (2015)

Labor force: 59,900 (2013)

Labor force - by occupation: services 69%, agriculture 11%, industry 20% (2008 est.)

Unemployment rate: 33.5% (2013)

Budget: revenues: $191.8 million expenditures: $230.9 million (2012 est)

Industries: food and beverages, textiles, light assembly operations, tourism, construction

Industrial production growth rate: -1% (2015 est.)

Electricity - production: 193 GWh (2012 est.)

Electricity - production by source: fossil fuel: 98.2% hydro: 0% nuclear: 0% other: 1.4% (2012 est.)

Electricity - consumption: 178 GWh (2012 est.)

Electricity - exports: 0 kWh (2013 est.)

Electricity - imports: 0 kWh (2013 est.)

Agriculture - products: bananas, cocoa, nutmeg, mace, citrus, avocados, root crops, sugarcane, maize, vegetables

Exports: $43.8 million (2015 est.)

Exports - commodities: nutmeg, bananas, cocoa, fruit and vegetables, clothing, mace

Exports - partners: Nigeria 44.7%, St. Lucia 10.8%, Antigua and Barbuda 7.3%, St. Kitts and Nevis 6.6%, Dominica 6.6%, United States 5.8% (2015)

Imports: $310.4 million (2015 est.)

Imports - commodities: food, manufactured goods, machinery, chemicals, fuel

Imports - partners: Trinidad and Tobago 49.6%, United States 16.4% (2015)

Debt - external: $679 million (2013 est.)

Economic aid - recipient: $8.3 million (1995)

Currency: 1 East Caribbean dollar (EC$) = 100 cents

Exchange rates: East Caribbean dollars (EC$) per US$1 – 2.7000 (fixed rate since 1976)

Fiscal year: calendar year

References

  1. ^ "World Bank forecast for Grenada, June 2018 (p. 152)" (PDF). World Bank. Retrieved 11 September 2018.
  2. ^ "Grenada Population Below Poverty Line(%)". CIA World Factbook. 2015. Retrieved 2016-07-30.
  3. ^ "Ease of Doing Business in Grenada". Doingbusiness.org. Retrieved 2017-01-23.
  4. ^ "Export Partners of Grenada". CIA World Factbook. 2015. Retrieved 2016-07-30.
  5. ^ "Import Partners of Grenada". CIA World Factbook. 2015. Retrieved 2016-07-30.
  6. ^ "Import Partners of Grenada". CIA World Factbook. 2015. Retrieved 2016-07-30.
  7. ^ "Import Partners of Grenada". CIA World Factbook. 2015. Retrieved 2016-07-30.
  8. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
Eastern Caribbean Central Bank

The Eastern Caribbean Central Bank (ECCB) is the central bank for the Eastern Caribbean dollar and is the monetary authority for the members of the Organisation of Eastern Caribbean States (OECS), with the exception of the British Virgin Islands and Martinique. Two of its core mandates are to maintain price and financial sector stability, by acting as a stabilizer and safe-guard of the banking system in the Eastern Caribbean Economic and Currency Union (OECS/ECCU.) It was founded in October 1983 with the goal of maintaining the stability and integrity of the subregion's currency and banking system in order to facilitate the balanced growth and development of its member states.

The bank is headquartered in Basseterre, St. Kitts, and is currently overseen by Mr. Timothy Antoine, the Bank Governor. Prior to assuming his post in February 2016, the bank was overseen by the late Sir K. Dwight Venner. In early 2015, the bank announced plans to phase out the production of the 1 and 2 cent pieces. The date was finalised as July 1, 2015. When a motive was sought, it was stated that it takes about six cents to make one cent pieces and about eight cents to make a 2 cent piece.

Grenadian dollar

The history of currency in the British colony of Grenada closely follows that of the British Eastern Caribbean territories in general. Even though Queen Anne's proclamation of 1704 brought the gold standard to the West Indies, silver pieces of eight (Spanish dollars and later Mexican dollars) continued to form a major portion of the circulating currency right into the latter half of the nineteenth century.

Britain adopted the gold standard in 1821 and an imperial order-in-council of 1838 resulted in Grenada formally adopting the sterling currency in the year 1840. However, despite the circulation of British coins in Grenada, the silver pieces of eight continued to circulate alongside them and the private sector continued to use dollar accounts for reckoning. The international silver crisis of 1873 signalled the end of the silver dollar era in the West Indies and silver dollars were demonetized in Grenada in 1878. This left a state of affairs, in which the British coinage circulated, being reckoned in dollar accounts at an automatic conversion rate of 1 dollar = 4 shillings 2 pence.

From 1949, with the introduction of the British West Indies dollar, the currency of Grenada became officially tied up with that of the British Eastern Caribbean territories in general. The British sterling coinage was eventually replaced by a new decimal coinage in 1955, with the new cent being equal to one half of the old penny.

Hurricane Ivan

Hurricane Ivan was a large, long-lived, Cape Verde hurricane that caused widespread damage in the Caribbean and United States. The cyclone was the ninth named storm, the sixth hurricane and the fourth major hurricane of the active 2004 Atlantic hurricane season. Ivan formed in early September, and reached Category 5 strength on the Saffir-Simpson Hurricane Scale.

Ivan caused catastrophic damage to Grenada as a strong Category 3 storm, heavy damage to Jamaica as a strong Category 4 storm and then Grand Cayman, Cayman Islands and the western tip of Cuba as a Category 5 storm. After peaking in strength, the hurricane moved north-northwest across the Gulf of Mexico to strike Pensacola/Milton, Florida and Alabama as a strong Category 3 storm, causing significant damage. Ivan dropped heavy rains on the Southeastern United States as it progressed northeast and east through the eastern United States, becoming an extratropical cyclone. The remnant low from the storm moved into the western subtropical Atlantic and regenerated into a tropical cyclone, which then moved across Florida and the Gulf of Mexico into Louisiana and Texas, causing minimal damage. Ivan caused an estimated $26.1 billion (2004 USD) along its path, of which $20.5 billion occurred in the United States.

Index of Grenada-related articles

The following is an alphabetical list of topics related to the nation of Grenada.

Outline of Grenada

The following outline is provided as an overview of and topical guide to Grenada:

Grenada – sovereign island nation that comprises the Island of Grenada and the southern Grenadines in the southeastern Caribbean Sea. Grenada is located north of Trinidad and Tobago and Venezuela, and south of Saint Vincent and the Grenadines. The national bird of Grenada is the critically endangered Grenada dove. Popularly known as the "Spice Isle" because of an abundance of locally grown spices and a culture of music, dance and food built into the image of "spice of life", Grenada is also a well-known tourist destination. It is one of the smallest independent nations in the Western Hemisphere.

Tobagan dollar

The dollar was the currency of Tobago until 1814. The currency comprised various cut Spanish dollars and countermarked French colonial coins. The dollar was subdivided into 11 bits, each of nine pence. In 1814, sterling was established as the official currency of the island. Since 1905, dollars have once more circulated on Tobago, first the Trinidad and Tobago dollar, then the British West Indies dollar, before the Trinidad and Tobago dollar was reintroduced.

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