Saint Lucia’s 2021 Economic Projections
The IMF has provided projections for various countries in the April WEO 2021 update. IMF staff compile the data appearing in the World Economic Outlook (WEO) at the time of the WEO exercises. This post will aim to discuss the 2021 IMF Economic Projections.
GDP Growth Rate
Due primarily to the COVID-19 pandemic, the Saint Lucian GDP growth rate in 2020 fell by 18.9%. However, while COVID-19 affected the entire world (in 2020), the fall in Saint Lucia’s GDP growth rate was significantly worse than the rest of Caribbean (which had an average fall of ~4.3%). In addition, the IMF is projecting that Saint Lucia’s 2021 GDP growth rate (3.1%) will be less than the average for the Caribbean (3.3%). Interestingly, this drop in GDP (2020) will be the highest ever GDP fall in the last 40 years.
GDP Per Capita
Projections indicate that Saint Lucia’s GDP per Capita will “recover” at $9,820 USD in 2021. Unfortunately, this still represents a lower GDP per Capita than 2014. The current administration has managed to shrink the economy to such a degree such that GDP per Capita during the 2021 election will be significantly less (8% lower) than the GDP per Capita during the 2016 election. The Saint Lucian economy will be in much WORSE shape at the end of the current administration’s term than at the beginning.
Central Government Debt
Saint Lucia’s Debt to GDP ratio is projected to be at 88.4% for 2021. This figure is 16% higher than the average Caribbean’s Debt to GDP ratio. The graph below shows that in the year’s 2020 and 2021, Saint Lucia’s Debt to GDP ratio to be significantly higher than the rest of the Caribbean. Furthermore, projections for Saint Lucia will remain significantly above the Caribbean average for at least the next 5 years.
The IMF recommends a Debt to GDP ratio of less than 60% as a prudent level and the current administration stated the following in their 2016 manifesto “Reduce the Debt-to-GDP ratio by at least five-percentage points in five years; and seek legislation for a sustainable ratio thereafter.” The current administration failed miserably at reducing the Debt to GDP ratio. Instead of a decrease of 5% there was an increase of 28% compared to an increase of less than 10% as the average for the Caribbean.
This latest data from the IMF continues to expose the current administration’s short sightedness on economic affairs as the Saint Lucian economy will be in worse shape in 2021 than in 2016. Furthermore, while COVID-19 decimated all economics across the world, it is clear from the figures that the impact to Saint Lucia was significantly worse than the average Caribbean economies.
Perhaps, one possible root cause of this tragic economic collapse is as result of the current administration’s heavy focus on touristic projects such as the failed “Pearl of Caribbean” aka DSH. This focus on tourism has magnified the economic impact to the Saint Lucian economy given the 70+% drop in tourism arrivals since the onset of the COVID-19 pandemic. The IMF projects that Saint Lucia will only exceed its 2019 of $2.12B USD in 2023 and shows that when compared to other Caribbean economies the current administration has failed to manage the Saint Lucian economy successfully.
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