Antigua & Barbuda - Economy
Antigua and Barbuda is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). According to Eastern Caribbean Central Bank (ECCB) statistics updated in January 2017, Antigua and Barbuda has an estimated Gross Domestic Product of USD $1.18 billion, with forecast growth of 3.21 percent in 2017. During the last fiscal year, the economy of Antigua and Barbuda continued to enjoy the positive effects of falling oil prices, increased tourist arrivals and revenue from the Citizenship by Investment program. The current government remains committed to creating an enhanced business climate to attract more foreign investment to the country.
The cultivation of the pineapple for a very long period has formed an interesting and practically the only minor industry in Antigua. The headquarters of the cultivation is in the neighbourhood of Liberta village, about the centre of the island. The pines grow very freely on hill slopes in a black friable loam. The cultivators are nearly all peasants. The prevailing mode of planting was rough and irregular, with about 3,000 plants to the acre.
The post-emancipation era was characterized by absentee expatriate plantation ownership, heavy peasant emigration, and a weak tradition of land husbandry and environmental awareness. The collapse of export sugar and cotton in recent decades has coincided with attempts at small-scale food production and livestock raising for the local market, aggressive tourism development and light manufacturing.
Most growth and diversification took place during the 1980s. The total number of visitors (stayover and cruise) and hotel rooms doubled, and electricity production tripled. The number of telephones and vehicles tripled, and construction permit value rose seven times. Average annual GDP grew roughly 7 percent, as did yearly inflation. Per capita real GDP rose over 2.5 times to roughly US$6,350 in 1991.
The 1980s tourism boom was heavily supported by foreign debt. External indebtedness rose nearly five-fold during the five-year 1985-1990 period to finance the construction of the Royal Antiguan Hotel and Heritage Quay duty-free shopping complex, airport expansion, and road and other infrastructure repair.
Antigua and Barbuda was ranked 113th out of 190 countries in the World Bank’s 2017 Doing Business report. The report highlighted positive changes in trading across borders and bankruptcy regulations but also noted some difficulties in starting a business and registering property.
According to the International Monetary Fund (IMF) [November 9, 2016], “The economy is expected to expand by 3.7 percent in 2016, underpinned by the continued recovery in the tourism sector and investment in new and existing tourist facilities, including the new cruise ship pier. In 2017, growth is projected to moderate to 3 percent, mainly reflecting still tight financing conditions for the public and private sector. Inflation declined to around zero in the first half of 2016, mostly due to fuel price adjustment and continued softness in global commodity prices, and is projected to remain at low levels for the rest of this year and into 2017."
The government strongly encourages foreign direct investment (FDI), particularly in industries that create jobs and earn foreign currency. Through the Antigua and Barbuda Investment Authority, the government facilitates and supports FDI in the country and maintains an open dialogue with current and potential investors. While the government welcomes all FDI interests, agriculture, diversified tourism, healthcare services, outsourcing and business support services, information and communication technologies and international financial services were identified by the government as priority investment areas.
There are no limits on foreign control in Antigua and Barbuda. Foreign investors may hold up to 100 percent of an investment, and a local or foreign entrepreneur needs about 40 days from start to finish to transfer the title on a piece of property.
Antigua and Barbuda has a labor force of about 35,000 persons with a literacy rate of approximately 90 percent. The law stipulates a minimum working age of 16 years, which corresponds with the provisions of the Education Act. In addition, persons under 18 years of age must have a medical clearance to work and may not work later than 10 p.m. The Ministry of Labor, which is required by law to conduct periodic inspections of workplaces, effectively enforces this law. The labor commissioner's office also has an inspectorate that investigates exploitive child labor matters.
The economy in Antigua and Barbuda is small and open. Therefore, the country is subject to the vagaries of the economic conditions in countries from which it imports goods and services. To some extent, the effect of imported prices on the economy is moderated because the country’s official currency, the Eastern Caribbean dollar, enjoys a fixed exchange rate with the US dollar (EC$2.70 = US$1.00). The Eastern Caribbean dollar which Antigua and Barbuda shares with other countries of the Leeward and Windward Islands is the strongest of the Caribbean currencies.
Tourism is the largest contributor to the economy, accounting for more than half of GDP. Agriculture and fisheries have dropped from 40 percent of GDP in the 1960s to about 12 percent. Manufacturing industries, which thrived in the decade of the 1980s, are export oriented and produce garments, paint, furniture, bedding and galvanized sheets.
Antigua and Barbuda's service-based economy contracted by 4.1% in 2010, experiencing its third consecutive year of decline. The Antiguan economy experienced solid growth from 2003 to 2007, reaching over 12% in 2006. Growth was driven by a construction boom in hotels and housing associated with the Cricket World Cup, but it dropped off in 2008 with the end of the boom. In 2009, Antigua was severely hit by the global economic crisis, suffering from the collapse of its largest financial institution and a steep drop in tourism. The economic decline continued in 2010 as the country struggled with a large deficit.
To lessen its vulnerability to natural disasters and economic shocks, Antigua has sought to diversify its economy by encouraging growth in transportation, communications, Internet gambling, and financial services.
Antigua and Barbuda's currency is the Eastern Caribbean Dollar (EC$), a regional currency shared among members of the Eastern Caribbean Currency Union (ECCU). The Eastern Caribbean Central Bank (ECCB) issues the EC$, manages monetary policy, and regulates and supervises commercial banking activities in its member countries. The ECCB has kept the EC$ pegged at EC$2.7=U.S. $1.
Antigua and Barbuda is a beneficiary of the U.S. Caribbean Basin Initiative, which grants duty-free entry into the United States for many goods. In 2005, 7.7% of its total exports went to the United States, and 48.9% of its total imports came from the United States. Antigua and Barbuda also belongs to the predominantly English-speaking Caribbean Community and Common Market (CARICOM) and the CARICOM Single Market and Economy (CSME).
The government of Antigua and Barbuda adopted an ambitious reform program in its endeavor to pull the economy from decades of fiscal weakness-characterized by persistent fiscal deficits, a triple-digit debt burden, endemic arrears, and a large civil service-and declining growth rates. The reform agenda included comprehensive tax reforms, civil service downsizing, measures to improve the investment climate, plans to reform the ailing social security system, and an impending strategy to regularize relations with creditors. These efforts have been complemented by extensive outreach to build public support. Successful implementation of the ongoing and planned reforms could mark a watershed for Antigua and Barbuda’s economic prospects.
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