 | |
| Currency | East Caribbean dollar (XCD) |
|---|---|
Trade organisations | CARICOM |
| Statistics | |
| GDP | |
GDP growth |
|
GDP per capita | |
GDP by sector | agriculture: 11%;industry: 20%;services: 69% (2008 est.) |
| 0.806% (2018)[1] | |
Population belowpoverty line | 38% (2008 est.)[3] |
Labour force | 59,900 (2013 est.) |
Labour force by occupation | agriculture 11%, industry 20%, services 69% (2008 est.) |
| Unemployment | 33.5% (2008 est.) |
Main industries | nutmeg, bananas, cocoa, fruit and vegetables, clothing, mace |
| External | |
| Exports | $43.8 million (2015 est.) |
Export goods | nutmeg,bananas, cocoa,fruit and vegetables,clothing,mace |
Main export partners |
|
| Imports | $310.4 million (2015 est.) |
Import goods | food, manufactured goods, machinery, chemicals, fuel |
Main import partners |
|
| 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 inUS dollars. | |
Theeconomy ofGrenada is largelytourism-based, small, and open economy. Between the 1980s and the 2000s, the main thrust of Grenada's economy has shifted fromagriculture to services, with tourism serving as the leading foreigncurrency earning sector. The country's principal export crops are the spicesnutmeg andmace (Grenada is the world's second-largest producer of nutmeg afterIndonesia). Other crops for export includecocoa,citrus fruits,bananas,cloves, andcinnamon. Manufacturing industries in Grenada operate mostly on a small scale, including production of beverages and other foodstuffs,textiles, and the assembly ofelectronic components for export.
Economic growth picked up in the late 1990s following slow growth and domesticfiscal adjustment in the early years of the decade. Despite an expansionaryfiscal policy, thepublic debt remained moderate at around 50 percent ofGDP as deficits were financed partly byprivatization receipts. Since 2001, economic growth has declined. The decline was caused by adverse shocks, such as a slowdown in the global economy andnatural 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 whenHurricane Ivan hit the country in September 2004; progress infiscal consolidation was impeded as government revenues fell and policy priorities was shifted to post-hurricane relief.
Although reconstruction has proceeded quickly with significant aid from theinternational 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 thegovernment faces large financing gaps. In the years ahead, reinvigorating growth will be a high priority, and continued efforts are needed to address vulnerabilities.
The economy of Grenada is small, and tourism is its largestforeign exchange earner.[9] Grenada shares a common central bank withOrganisation of Eastern Caribbean States (OECS)[10] and holdsEast Caribbean dollars as its currency. After tourism, Grenada relies heavily on agricultural exports, mainly different types of spices.[11] Nutmeg, wheat flour, and various fruits make up the majority of Grenada's exports (per 2017).[12] Grenada has suffered many economic drawbacks since becoming a nation. A major concern is the risingfiscal deficit and heavy debt crippling its government operations.Hurricane Ivan in 2004 led to serious setbacks for Grenada, along with theGreat Recession in 2008 as theUnited States of America is one of Grenada's largest trade partners.[13] Grenada was listed nine spaces above the bottom when it came to total debt in 126 developing countries in 2017.[14]
After experiencingGDP 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 theSeptember 11, 2001, terrorist attacks, and damages caused by severalhurricanes.
Theeconomy 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 who 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 ofHurricane 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 a 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 fromTropical Storm Lili. As the economy 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. 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 a 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 theEastern Caribbean Central Bank (ECCB), which managesmonetary 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.
Grenada's current account balance has remained in large deficit due to its heavy dependence on import of mostconsumer 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, officialgrants andloans, 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.
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 theWorld Bank and theCaribbean 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. The country also launched a citizenship by investment program in 2013.[15]
The nation of Grenada joined theInternational Monetary Fund (IMF) on August 27, 1975.[16] Since then, Grenada has been under heavy review with the IMF, who have made Grenada eligible for special drawing rights.Special drawing rights (abbreviated SDR) are supplementaryforeign exchange reserve assets defined and maintained by the IMF. Based on Grenada's performances, both economically and policy wise, Grenada can be eligible for more SDRs. In the previous years, Grenada and the IMF have been working closely to grow and sustain their economy.[17][18]
This article incorporatespublic domain material fromThe World Factbook (2025 ed.).CIA.
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