St. Kitts and Nevis - Overview of economy
St. Kitts has been extremely dependent on sugar production, and, until the 1980s, sugar was the island's principal export and source of employment. Nevis, less fertile than St. Kitts, was a cotton-producing island. Both, however, have diversified their economies over the last 3 decades, although the sugar industry remains an important employer in St. Kitts. Currently the major industry in the islands is tourism, encouraged by government investment in cruise ship facilities and by private-sector investment in hotels.
In the late 1990s St. Kitts and Nevis were badly affected by recurring hurricanes. Extensive damage to agriculture and buildings occurred after Hurricane Georges in 1998 and Hurricane Lenny in 1999. In 1999 the government estimated that Hurricane Georges had caused over US$400 million of damage and was forced to turn to the International Monetary Fund (IMF) for emergency assistance with reconstruction. The devastation slowed tourist arrivals, due to damaged infrastructure and closed hotels, and also reduced the 1999 sugar crop. Construction, on the other hand, increased as people repaired their homes and the government rebuilt infrastructure.
The government has partly succeeded in reducing the country's dependence on sugar by encouraging other forms of agriculture, manufacturing, and financial services, as well as tourism. The light manufacturing sector includes electronic components, textiles, and packaging, for the U.S. market, while 1 industrial estate specializes in heavy operational machinery. Tourism, despite natural disasters, showed steady growth throughout the 1990s, and the government is attempting to build up an offshore financial sector. Nevis already has an international reputation as an established " tax haven ."
St. Kitts and Nevis has a mix of small, local companies and larger, U.S.-owned corporations. The state sector is still large, despite attempts by the government to divest itself of the state-owned and anachronistic Sugar Company, which drains government resources and remains a liability rather than an asset. Despite this state of affairs and diversification, sugar continues to occupy a large place in the islands' economic and social life. One persistent cause for concern is the country's growing debt, made worse by hurricane damage and the need to borrow to pay for reconstruction projects.