Economic Outline

flag Grenada 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.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 1.221.311.391.471.55
GDP (Constant Prices, Annual % Change) 6.43.93.83.53.2
GDP per Capita (USD) 10,69511,43712,10812,72713,367
General Government Balance (in % of GDP) 2.22.82.32.20.8
General Government Gross Debt (in % of GDP) 63.660.257.754.651.6
Inflation Rate (%) n/a3.62.52.02.0
Current Account (billions USD) -0.21-0.19-0.18-0.17-0.19
Current Account (in % of GDP) -17.0-14.8-12.7-11.8-12.3

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
East Caribbean Dollar (XCD) - Average Annual Exchange Rate For 1 MUR 0.080.080.080.080.07

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Value Added (in % of GDP) 4.3 15.1 62.9
Value Added (Annual % Change) -11.0 12.7 5.3

Source: World Bank - Latest available data.

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Sources of General Economic Information

Useful Resources
Ministry of Finance
Official Government Website
Eastern Caribbean Central Bank
 
 

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Latest Update: November 2023