Caribbean Region: Review of Economic Growth and ... - USITC

St. Kitts & Nevis: Selected social development indicatorsMRY(2000–07)Middleincomeaverage,2006Population (thousands, 2006) 48 32,183Population below poverty line(%)Poverty headcount ratio at $1per day (PPP, % of population)nanananaLife expectancy at birth, 2002 71 70Literacy rate, total (%, 2003) 98 90Population with access toimproved sanitation facilities(%, 2004)95 62Population with access toimproved water source (%,2004)100 83Sources: World Development Indicators; CIA World Factbook.See appendix D for sources and definitions.Note: MRY=most recent year for which data are available; na= “not available.”Source: World Development Indicators. See appendix D forsources and definitions.Note: MIA = Middle income average for 2005.Classified by the World Bank as an upper-middle-income economy, St. Kitts and Nevis’ per-capita GDP isone of the highest in the region and the second-highest among OECS countries. The two-island federationconsists of two volcanic islands. Although the economy once depended substantially on sugar productionand export, reform in EU preference programs and preference erosion have resulted in a closure of the staterunsugar company in 2005 after three centuries of sugar production. St. Kitts and Nevis is refocusing theeconomy on services, especially tourism. The government has increased diversification efforts to reduce thecountry’s economic vulnerability; key sectors identified by the government for development include tourism,financial services, light manufacturing, agro-industries, and telecommunications, as well as agriculture,livestock, and fisheries.Recent economic growth was driven by tourism and construction related to the Cricket World Cup. A veryhigh debt level, approaching 200 percent relative to GDP in recent years (the highest debt-to-GDP ratiowithin CARICOM, and among the highest levels in the world), has hampered economic growth. The mainfactors contributing to the high debt levels are infrastructure restoration costs from a series of naturaldisasters, costs associated with the closure of the state-run sugar company, and the increasing costs of anaging population.St. Kitts and Nevis ranked 54th out of 177 countries in the United Nations 2007–08 human development2index, placing St. Kitts and Nevis in the “high human development” category. The infant mortality rate hassteadily declined since 1990. In addition, St. Kitts and Nevis has a high literacy rate, exceeding 95 percent,and good social indicators comparable to the rest of the region. Despite this high literacy rate, an IMF reportfinds that a shortage of skilled labor could constrain economic growth. Despite the relatively high per capitaincome, poverty remains a significant problem. A 2001 poverty assessment report found that approximately2See app. D for a definition of the human development index.4-108