St. Kitts and Nevis - Future trends

Apart from the unpredictable issue of future hurricanes, economic prospects for St. Kitts and Nevis will be determined by the sugar industry and relations between the 2 islands. The government will seek to reduce its subsidies to the faltering state-owned sugar company, either by privatizing any profitable parts of its operations or by closing it altogether. The latter course of action would carry with it drastic social consequences, including wide-scale unemployment.

Much also depends on whether St. Kitts and Nevis remain within their federal relationship or whether Nevis eventually decides to go its own way. If it should do so, the island would be one of the smallest sovereign states in the world and even more vulnerable to unexpected economic shocks such as another hurricane. What is more likely is that Nevis will extract concessions from St. Kitts, especially on tax and government spending issues, and will remain within the federation, if rather reluctantly.

The broader picture for the 2 islands is also uncertain. If there is a general crackdown on offshore financial centers, as advocated by the wealthy nations of the OECS, then the budding financial sector in St. Kitts and Nevis will suffer as investors move their money elsewhere. Manufacturing, too, is also vulnerable to increased competition from elsewhere in the Caribbean and Latin America as trade barriers come down and foreign companies look for the cheapest sources of labor. Tourism, despite the risks it faces from weather and a possible recession in the United States, looks like the safest future option for these small and vulnerable islands.

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