Grenada: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to adress the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

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 the creation of the citizenship by investment program, which produced a resurgence in the construction and manufacturing sectors of the economy. After suffering one of the sharpest contractions in its history in 2020 (-13.8% of GDP) amid the COVID-19 pandemic, the country’s economy rebounded in 2021 (+5.6%) and continued on a positive trend in 2022 (+3.6%) on the back of construction activity, the gradual pickup in tourist arrivals, and the recovery in offshore education. The IMF expects the island’s growth rate to remain stable over the forecast horizon (at 3.6% this year and 3.9% in 2024), although risks to the outlook persist, such as a continued rise in global commodity prices, which could lead to further increase in inflation, and a more prolonged pandemic, with implications for recovery in tourism-related activities.

According to the IMF, the debt-to-GDP ratio was estimated at 68.9% in 2022 (from a pre-pandemic level of 60.6%) and is expected to follow a downward trend this year, totalling 66.3% before declining further to 64.2% in 2024. Almost 80% of the debt is external. The government is committed to a return to the fiscal rules in 2023, after triggering the escape clause in 2020–22 to allow for counter-cyclical fiscal policy. In fact, the Central government's primary balance was negative by 1.5% in 2022 but should return to positive territory in 2023 (3.5%) and 2024 (3.8% - IMF). The war in Ukraine affected Grenada primarily through higher commodity prices, resulting in a higher-than-normal inflation rate in 2022 (4.5%). To reduce the impact of unprecedented freight increases due to the COVID-19 pandemic, the government capped freight at the 2019 level on all goods imported into Grenada, with effect from October 1, 2022, for a six-month period, but the Ministry of Finance stated in April 2023 that the relief measure will not be extended. Despite that, the IMF expects a decrease in the inflation rate in 2023 (3.5%) and 2024 (1.8%). 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 (latest data available). 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. The country’s GDP per capita (PPP) was estimated at USD 18,436 in 2022 by the IMF.

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: September 2023