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Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines are members of the World Bank.

These Organization of Eastern Caribbean States (OECS) countries are small states with a combined population of approximately 625,000. Their small size limits access to economies of scale, which in turn shapes the structure of the economy by limiting diversification and the composition of international trade, and increases exposure to volatility, natural disasters, and other shocks. Size also affects returns to scale in the public sector, which has implications for government capacity and the organization and financing of service delivery.

Economic Outlook

The OECS is heavily dependent on tourism, which contributes to 39 percent of the Gross Domestic Product (GDP) on average and accounts for 11 percent of the region's jobs. This means that the economic performance of OECS countries is influenced by what happens in the tourism sector, as well as the economic cycles in the main tourism source markets, including the USA, Canada, and Europe. This dependency was particularly evident during the aftermath of the Global Financial Crisis (GFC) and the COVID-19 pandemic. Relying on tourism also makes the region vulnerable to the effects of extreme weather events, as they can disrupt tourist arrivals and further impact the economy.

In Dominica, the economy relies on tourism and is supported by significant public investment funded by citizenship by investment revenues. The development of geothermal resources and the construction of an international airport are expected to boost both structural and potential growth.

Economic growth has helped mitigate losses from disasters, and efforts to keep inflation low aim to reduce poverty in the medium term. Dominica is still affected by fluctuating food and fuel costs, economic impacts of global political events, and reliance on unpredictable central bank revenues.

Grenada's economic growth in 2023 is expected to be modest at 3.9%, with an average of 3.7% in the medium term, as tourism and construction are expanding slowly. Nevertheless, strong private investment will support construction and implementation of resilience and climate reforms will have a positive impact on the economy. Inflation is predicted to peak at 3.0% by the end of 2023.

A robust recovery in tax revenue, along with measures like increasing the VAT on "sin" products is expected to balance out extra spending and maintain the primary financial target in the medium term. Public debt will decrease, supported by economic growth, fiscal surplus, and lower debt payments, projected to reach 55.1% of GDP by 2025.

The Disaster Risk Strategy (DRS), aimed at detailing a comprehensive plan including policies, cost, and financing for building resilience to natural disasters and climate change, will help mitigate climate-related risks.

Saint Lucia's growth is expected to be moderate at 3.6% in 2023, with a further slowdown in the medium term. This growth will be supported by increased tourist arrivals and major construction projects, such as airport renovations and hotel construction, peaking in 2024. Reduction in poverty will continue, though at a slower pace in the medium term, and inflationary pressures are expected to ease.

St. Vincent and the Grenadines is expected to maintain strong growth at 6.0 percent in 2023 and 4.8 percent in 2024, driven by a rebound in tourism that surpasses 2019 levels. Poverty is expected to follow a similar path. Tourism growth over the medium term will be further supported by a new airport and additional hotel and resort facilities.

The government has taken measures to rebuild fiscal reserves, including replenishing the contingency fund after using it in response to the volcanic eruption. These measures involve prioritising public investment in port modernization and a new hospital while reducing other projects, increasing customs service charges, improving taxpayer compliance, and reforming pension funding.

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Country Office Contacts

In the Caribbean
Penny Bowen
+1 (876) 861-2468