St. Kitts and Nevis Country Statistics

LOCATION

The twin-island state of St. Kitts and Nevis is in the Lesser Antilles in the Eastern Caribbean. The country is in the northern part of the Leeward Islands group. It is 64.6 miles (104 km) west of Antigua and 57.9 miles (93.2 km) northwest of Montserrat.

ECONOMY

The economic turnaround St. Kitts and Nevis experienced during the last decade was highly commendable. Faced with flagging economic activity, unstable fiscal accounts and deteriorating external accounts, the country entered a 36-month Stand-By Arrangement (SBA) with the IMF in July 2011, which supported its home-grown economic reform programme. By the time the agreement ended in July 2014, the country had made significant progress. Economic activity rebounded after two years of decline, the country’s fiscal and external positions improved, and the management of its fiscal resources was enhanced. In addition to improved fiscal management, the country benefitted significantly from healthy inflows from its Citizenship-By-Investment (CBI) programme during the last decade. This revenue provided a major boost to government’s revenue and supported the external position. In the last ten years, St. Kitts and Nevis moved from an economy in contraction, with a large fiscal deficit and public debt over 160 percent of GDP in 2010, to a growing economy in 2019, with a fiscal surplus and debt below 50 percent of GDP.

Over the last five years, the output from the construction sector represented an average of 21 percent of GDP. The next largest contributors, the transport, storage and communication sector, and education, each accounted for 12 percent. Using the output from hotels and restaurants as a proxy for the tourism sector, its contribution to GDP averaged 10 percent during the period. The real estate, renting and business activities sector accounted for 11 percent.

According to the Caribbean Development Bank, real GDP expanded by 2.5 percent in 2019, led by a strong performance in the tourism sector, which experienced a 6.7 percent increase in stay-over arrivals. Conversely, cruise passenger arrivals fell by 9.5 percent. Overall, total tourist expenditure increased by 3.1 percent. The strong performance of the tourism sector helped to generate activity in other key sectors, including wholesale and retail trade, and transport, storage and communication. The construction sector expanded by 2 percent, as tourism-related investment and public-sector projects provided the bulk of the impetus. These projects included the completion of the second cruise pier at Port Zante and work to rehabilitate roads and the Robert L. Bradshaw Airport in St. Kitts.

The country’s fiscal surplus decreased to 1.6 percent of GDP from 3.2 percent in 2018. This outturn was the result of a 2.7 percent increase in current expenditure and a 10.2 percent increase in capital spending, which offset the 3.9 percent increase in current revenue. The increase in revenue was the result of increases in tax revenue (3 percent) and non-tax revenue (4.7 percent), which was dominated by Citizenship by Investment (CBI) receipts. In December 2018, the government introduced a new social welfare programme, which caused spending on transfers and subsidies to increase by 11.8 percent in 2019. Due to a 14.4 percent increase in debt owed by public enterprises, total public-sector debt increased to 57.4 percent of GDP, compared to 56.4 percent in 2018.

Despite its strong performances in recent times, the COVID-19 pandemic threatens to consume some of St. Kitts and Nevis’ hard-earned gains. The virus has already brought the tourism sector to a standstill and has caused major disruptions in other key sectors. In addition to this, government’s response to the virus has resulted in increased fiscal outlays. Because a vaccine is unlikely to be developed before 2021, the total effect of the virus on GDP and the country’s fiscal accounts will not be known for some time. The expectation, however, is that there will be some deterioration.