The OECS comprise a diverse set of countries that share small, open economies and because of their geographical location are highly prone to natural disasters. Because of their size, they also tend to specialize in few products and services but cannot benefit from economies of scale. Private remittances are significant, and in some countries exceed the value of export. These countries rely extensively on tourism and agriculture, but do not have a diversified enough market for their products and services and, as a result, are subject to excessive volatility.
The impact of the 2008 global financial crisis was severe as tourism, remittances, and financial activity decreased sharply, growth rates plummeted, debt and fiscal imbalances increased to high levels, and labor market conditions deteriorated. With decreasing productivity and weak external demand in key sectors, decreasing FDI, and continued structural weaknesses, these impacts are still lingering today.
While OECS countries have made overall progress in achieving the Millennium Development Goals (MDGs), challenges remain. Despite high human development indices, OECS countries have not succeeded in reducing poverty to levels compatible with their level of income per capita. The official poverty rates, which are estimated using each country's national poverty line, vary from 18 percent to 38 percent. The majority of the poor are found in rural areas where about half of the population lives. Studies report that female-headed households, which account for two-thirds of all households in the sub-region, are more likely to be poor.
Unemployment has risen in most OECS countries in the aftermath of the global financial crisis. Lower demand for OECS exports and services resulting from the 2008 crisis exacerbated the already high pre-crisis levels of unemployment in most OECS countries. Unemployment is higher among the poor and in some of the OECS countries, 35 percent are unemployed. Youth unemployment is a source of particular concern.
For OECS governments, the priorities are to promote inclusive growth, generate employment, and increase economic and social resilience.
Last Updated: Mar 30, 2015