St. Lucia - Economy
Agriculture is the main economic activity on St. Lucia, which is the leading producer of bananas in the Windward Islands group. Tourism, with direct flights from Europe and North America, has recently become an equally important economic activity. St. Lucia's manufacturing sector has grown steadily, with the construction of many light manufacturing and assembly plants that produce for local or export markets.
Though foreign investment in manufacturing and information processing in recent years has increased St. Lucia's industrial base, the economy remains vulnerable due to its heavy dependence on banana production, which is subject to periodic droughts and tropical storms. Indeed, the destructive effect of Tropical Storm Iris in mid-1995 caused the loss of 20% of the year's banana crop, and the agriculture sector recorded its sixth year of decline in 1998. Increased competition from Latin American bananas will probably further reduce market prices, intensifying St. Lucia's need to diversify its economy in coming years by expanding tourism, manufacturing, and construction. In 2001, GDP growth at current prices was 2%, but in 2002 contracted 4% due to the full combination of adverse factors: the global economic slowdown, declining export demand, and the sharp fall-off of tourism after the 11 September 2001 terrorist attacks in the United States. Inflation remained subdued at 2.3% for both years.