Although Saint Lucia’s per capita income is relatively high among developing countries, it has been disadvantaged by its economic dependence on bananas and by its small size, small population, limited physical and human resources, and the frequency of hurricanes.
It has nevertheless successfully exploited opportunities in tourism and small-scale industry, benefiting from trade preferences from the EU and USA, and creating a more diverse economy, with well developed manufacturing, and has substantially reduced its dependence on bananas, the production and export prices of which have declined sharply. It has also encouraged development of an offshore financial services sector and a framework of sound regulation has been established.
After steady growth in the late 1990s, the economy stalled in 2000, and was in recession during 2000–02, shrinking by more than four per cent in 2001, due to the downturn in the USA and consequent fall in tourism and weakening of international markets for manufactures and bananas. In 2003 tourism recovered strongly, with more air services to the island and construction of a new resort. Tourism income was then hit in 2007 by the impact of Hurricane Dean in August – GDP growth moderating that year to 1.5 per cent – and again in 2008–09 by the world economic downturn, causing the economy to stall in 2009 and then to contract during 2009–14.