Grenada: Economic Outline

Economic Indicators

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The country relies on tourism and revenue generated by St. George’s University as its main source of foreign exchange. However, the government has been working on expanding its sources of revenue, including by the creation of the citizenship by investment program, which produced a resurgence in the construction and manufacturing sectors of the economy. In 2020, Grenada suffered one of the sharpest contractions in its economic history, due to the COVID-19 pandemic. According to IMF estimates, GDP growth contracted by -13.1%, mainly due to international travel restrictions. The economy rebounded only marginally in 2021 with an estimated growth of 2.7% but it is expected to accelerate to 6.2% this year and 5.8% in 2023 as the global sanitary crisis ends and tourism revenues gradually pick up (IMF).

According to the IMF, gross debt reached 70.2% in 2021 (from a pre-pandemic level of 60.6%) and is expected to follow a downward trend this year, totalling 69.4% before declining further to 65% in 2023. The government budget is structurally positive: it recorded a surplus of 2.6% of GDP in 2021 and is forecast to reach 3% by 2023. After recording negative inflation in 2020 (-0.7%), the rate picked up to 2.5% last year amid higher global energy and commodity prices. The IMF expects inflation to slow to 0.6% this year before picking up again in 2023 (1.2%). Even though Grenada is always at risk of natural disasters such as hurricanes, the country hasn't been hit by any hurricanes in fifteen years, making it one of the Caribbean countries with the lowest risk of being affected by such disasters. As a result, Grenada's economic situation tends to be more stable than those in risk areas, where natural disaster damage can have a huge economic impact.

In the 2022 budget statement, the unemployment rate was reported at 16.6% at the end of June 2021, declining from 28.4% in June 2020. At the end of the same period, youth unemployment stood at 38.6%. The island’s structural weaknesses include an external competitiveness gap, and a weak business environment and labour market. Also, groups such as farmers are exposed to limited education and severe damage derived from weather conditions.

Monetary Indicators	2016	2017	2018	2019	2020
East Caribbean Dollar (XCD) - Average Annual Exchange Rate For 1 GHS	0.68	0.62	0.59	0.52	0.48

Source: World Bank - Latest available data.

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Latest Update: February 2023