CARIBBEAN DEVELOPMENT BANK
St.
2018 · 43 pages

Abstract
Lucia, an English-speaking country in the Eastern Caribbean, achieved its independence on February 22, 1979. The country's population was 167,366 in 2011 and increased to 172,623 by 2014. The population's age structure is characterized by a significant proportion of young people, with 26.3% of St. Lucians between 10 and 24 years old in 2012. Birth rates are increasing, and death rates are declining, with the percentage of persons above 55 years expanding. The country's economy was heavily reliant on the export of bananas until the late 1990s, when earnings from tourism surpassed revenue from bananas. This shift occurred in a context of lost preferential treatment for Caribbean banana-exporting countries, such as St. Lucia, and the impact of severe weather systems, lack of technology, and crop diseases on the banana industry. Despite efforts to restore the industry, the earnings gained under protected trade did not return. The shift to tourism has resulted in mixed outcomes for different sectors and regions. Farmers, who previously profited from the banana industry, have had to find alternative means of supporting their families. The industry has also brought about employment diffusion and improved living standards for participants. However, the decline in the banana industry has intensified internal migration, with those now unemployed moving to areas such as Castries, Soufrière, Gros Islet, and Vieux Fort in search of work. St. Lucia has been struggling to achieve growth, with an average growth rate of less than 1% over the decade ending 2015, according to the Caribbean Development Bank. The country's production output has been weak, and data on total expenditure has demonstrated that not enough revenue has been collected. Recurrent expenditure constitutes the bulk of total spending, with wages and salaries comprising a significant share of recurrent expenditure. The Government of St. Lucia's spending has been strained due to debt servicing, with public debt as a percentage of GDP increasing from 65% in 2011 to 75.4% in 2015. In response, the Government has introduced economic policies and strategies aimed at raising revenue, including the introduction of Value Added Tax (VAT) in 2012. However, these policies and strategies have not resulted in the economic and social benefits anticipated. The rate of unemployment has remained high, with approximately 22.1% of the population unemployed in 2017. Poverty is also a significant issue, with close to 29% of the population determined poor in the 2005/2006 poverty assessment.
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