Growth In Saint Lucia Will Slow In 2023 As Base Effects Fade, Tourism Rebound Slows

• Fitch Solutions is forecasting that Saint Lucian's real GDP will grow 3.6% in 2023 from an estimated 12.2% in 2022, and an estimated 11.4% in 2021 as base effects fade and the tourism sector growth slows. 
• Lucia’s economy suffered a catastrophic contraction of -20.4% in 2020, due to Covid’s impact on the tourism industry. The country has been on a road of recovery in the last two years, and Fitch expects that the continued rebound in the travel sector will boost employment and support private consumption.
• In particular, private consumption will be driven by tourism sector growth and the resulting reduction in unemployment, as well as sustained social spending by the government, which will support household incomes.
• Additionally, the government policies of the centre-left Labour Party will keep government spending elevated. As exports and investment growth ease compared to the rebound seen in 2022, Fitch also expects that growth in St. Lucia will normalize closer to 2.0% (2015-2019) in the years ahead, averaging 2.6% growth in 2023-2026.
• Risks to this view, however, are to the downside. As was seen during the pandemic, St. Lucia is extremely vulnerable to outside shocks and is very dependent on the tourism industry. If the economic slowdown is stronger than the current prediction in key tourism markets like the United States, there is likely to be substantially slower growth in St. Lucia in 2023.

(Source: Fitch Solutions)