Grenada: Economic Outline

Economic Indicators

Between 2015 and 2019, Grenada has surpassed its eastern Caribbean counterparts in economic performance, boasting an average annual growth rate of 3.3%. Despite this growth, the nation has maintained relatively low public debt and managed to decrease poverty levels. Construction and tourism have been primary drivers of this growth, aided by structural reforms implemented starting in 2015. State-Owned Enterprises (SOEs) are integral to the country's economic stability and growth, playing significant roles across critical sectors. Economic conditions showed improvement in 2023, with growth estimated at 4.8% thanks to factors such as visitor arrivals, public and private construction endeavors, and the resumption of students attending St. George’s University (SGU) made notable contributions to the economy. Projected real output growth for 2024 is anticipated to moderate to 4.1%, with an average of 3.7% expected over the medium term. This slowdown is attributed to a decreased rate of expansion in both tourism and construction, as public investments are anticipated to decrease due to the implementation of new fiscal regulations (data World Bank).

Concerning public finances, in 2023, the fiscal surplus continued to strengthen, driven by the rise in revenues from Citizenship by Investment (CBI) non-tax sources (XCD 382.9 million) and robust economic activity. Total revenue reached 36.8% of GDP in 2023, surpassing previous levels. Despite elevated capital expenditures, these enhancements outweighed the fiscal pressures. However, public sector debt surged to 75.5% of GDP in 2023, marking an increase from 64.1% in 2022. The authorities are advancing an ambitious fiscal reform agenda. On the expenditure side, they aim to raise wages moderately within the new Fiscal Resilience Act (FRA) ceiling of 13% of GDP. CBI inflows, which spiked in 2023-24, are projected to taper off from 7.9% of GDP in 2024 to 4.7% in 2026, reducing capital spending funds. A new public sector pension scheme should become operational in 2024 and may require Government contributions going forward. Public debt is forecasted to continue its downward trajectory, buoyed by output growth, fiscal surplus, and decreasing debt service payments, reaching 71.8% of GDP by 2026. Additional primary surplus is expected to be allocated towards the National Transformation Fund, further aiding in debt reduction. Inflation climbed to 2.7% by the end of 2023, largely due to upswings in food and fuel prices. A general inflation rate of 2.0% is forecast from 2024 onwards (data World Bank). Grenada's economy is heavily dependent on tourism, a sector that is greatly influenced by the global business cycle and vulnerable to natural disasters.

According to the 2023 budget statement, the unemployment rate was estimated at 11.6% in 2023; however, rates continue to be higher among women (14.6%) and youth (36.2%). Poverty, measured at USD 6.85 a day in 2017 PPP, is estimated to have declined to 13.9% in 2023, remaining slightly above pre-pandemic levels (13.8% in 2018). With moderate economic growth and controlled inflation, poverty (measured at USD 6.85 a day in 2017 PPP) is projected to fall below pre-pandemic levels in 2024 and continue to decline in 2025 and 2026. Inequality, as measured by the Gini coefficient, has remained around 0.44 since 2018, which is considered high by international standards. Gender disparities in accessing economic opportunities persist, and youth unemployment remains significantly above the national average.

Monetary Indicators	2016	2017	2018	2019	2020
East Caribbean Dollar (XCD) - Average Annual Exchange Rate For 1 GBP	3.65	3.47	3.60	3.38	3.46

Source: World Bank - Latest available data.

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Latest Update: May 2024