Grenada: Economy

The economy of Grenada, based primarily upon services (tourism and education) and agricultural production (nutmeg and cocoa), was brought to a near standstill by Hurricane Ivan on September 7, 2004. Thirty-seven people were killed by the hurricane, and approximately 8,000-10,000 left homeless. Hurricane Ivan damaged or destroyed 90% of the buildings on the island, including some tourist facilities. Hurricane Emily swept over the island 10 months later, wreaking further havoc. Overall damage totaled as much as 2.5 times annual GDP. Reconstruction proceeded quickly, with the United States as the leading donor, with an emergency program of about $45 million aimed at repairing and rebuilding schools, health clinics, community centers, and housing; training several thousand Grenadians in construction and other fields; providing grants to private businesses to speed their recovery; and providing a variety of aid to help Grenada diversify its agriculture and tourism sectors.

Despite initial high unemployment in the tourist and other sectors, urban Grenadians benefited post-hurricane from job opportunities in the construction sector. Agricultural workers did not fare as well. Hurricane Ivan destroyed or significantly damaged a large percentage of Grenada's tree crops, and Hurricane Emily further damaged the sector. The hurricanes exacerbated an ongoing exodus out of the rural areas to the country's cities and towns as young Grenadians increasingly chose not to farm. Complete recovery will take years. Most hotels, restaurants, and other businesses reopened by 2007. In anticipation of the April 2007 Cricket World Cup matches held on the island, many Grenadians renewed their focus on the rebuilding process. Predictions for an increase in tourism were realized in part, although Grenada lags behind its neighbors in marketing the island abroad, particularly in the largely untapped U.S. market. St. George's University, a large American medical and veterinary school with about 3,700 graduate and undergraduate students, is in full operation.

Grenada is a member of the Eastern Caribbean Currency Union (ECCU). The Eastern Caribbean Central Bank (ECCB) issues a common currency for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries.

Grenada is also a member of the Caribbean Community and Common Market (CARICOM). Most goods can be imported into Grenada under open general license, but some goods require specific licenses. Goods that are produced in the Eastern Caribbean receive additional protection; in May 1991, the CARICOM common external tariff (CET) was implemented. The CET aims to facilitate economic growth through intra-regional trade by offering duty-free trade among CARICOM members and duties on goods imported from outside CARICOM. In the spring of 2008, due to dramatic increases in the costs of food and fuel, the government removed the CET from some essential items, including baby formula, yeast, and baking powder. The country suffered greatly from the global economic downturn, which reduced tourism arrivals. Although the country replanted many nutmeg trees, the lag between planting and bearing fruit has left Grenada with fewer resources than hoped. The government reintroduced the value added tax in 2010.

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