Throughout colonization and until recent years, St. Kitts' economy relied on the production of sugar, as did many other island nations in the Caribbean. Then, around 1970, the sugar industry began to decline, and now tourism, which is supplemented by manufacturing goods for export and offshore banking, is the primary money-maker for this little Caribbean island destination.
St. Kitts and Nevis were among the last islands to rely on the production of sugar in the Eastern Caribbean. But when the cultivation of sugarcane faced a steady decline in profit, the government of St. Kitts and Nevis had to stimulate economic growth in other areas and diversify the already existing agricultural systems to avoid relying solely on the production of sugar.
The 2005 harvest of sugarcane on St. Kitts will be its last. The government has decided to close the state-run sugar company, which will put an end to the island's sugar industry because the country has experienced decades of loss. The government of St. Kitts and Nevis has initiated a program designed to expand the country's agriculture to make up for the loss of the sugar industry. Presently, farmers on the island produce crops of cotton, peanuts, and various vegetables.
In other efforts to keep the economy of St. Kitts and Nevis afloat, the government has implemented an investment-incentives program aimed at new businesses on the islands. This program encourages both foreign private and domestic investments with incentives that include liberal tax-holidays, no duties on imported equipment and materials, as well as funding for the training of local personnel. Overall, tourism is the economic force that has seen the greatest amount of growth.
When St. Kitts' economy began relying on tourism instead of sugar, the country's economic state improved greatly. By 1987, the tourism industry had surpassed sugar as the island's dominant foreign-exchange breadwinner, and tourism caused steady economic growth throughout most of the 1990s. Although tourism became a strong point for the people of St. Kitts and Nevis, who have come to rely on the annual income the industry provides, tourism experienced some losses and declined in 1998 and 1999 because of hurricanes. Also, the terrorist attacks of Sept. 11, 2001, damaged the tourism-dependent economy.
Investments in the tourism industry by major resorts that have been opening large establishments on St. Kitts and Nevis have given the islands' tourism-based economy a major boost. And with several resort projects planned for the future, the economic outlook for St. Kitts is quite good. Consumer prices have experienced a slight increase in recent years of approximately 3 to 4 percent. St. Kitts and Nevis are members of the Eastern Caribbean Currency Union (ECCU), and they use the Eastern Caribbean Dollar for their currency, which is issued by the Eastern Caribbean Central Bank (ECCB). The ECCB also serves as a regulator and supervisor of commercial banking for its member countries.
As with most economies, St. Kitts and Nevis experience some fluctuation in their various money-making industries, but tourism has been able to sustain these little Caribbean islands, which offer many reasons to visit.
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