Introduction
On behalf of The UWI and the UWI Five Islands campus let me take this
opportunity to wish the people of Grenada, Carriacou and Petit Martinique (Grenada)
best wishes on the occasion of their 50 th anniversary of independence. Grenada is my
favourite Caribbean island and some of my favourite humans live there. I am taking the
opportunity of the 50 th anniversary of independence to provide a brief analysis of the
economic performance of Grenada since independence. In the short space provided by
a newspaper article I will focus on two economic variables, Gross Domestic Product per
Capita and Growth in Real Gross Domestic Product. I am able to access an
independent, credible and continuous series of data from the World Bank for the period
1978 to 2023 for these variables and the analysis will be based on this time period
which excludes the first four years of independence. Of course, economic growth,
national and social development is a complicated issue and many other indicators and
variables will matter for a more comprehensive analysis.
Income & Wealth Since Independence
Gross Domestic Product (GDP) is the total market value of all the goods and
services a country produces in a period of time. It is meant to reflect the market value of
goods and services produced in a country during a period of time and by extension the
total amount of income earned in the country during that period of time. When GDP is
divided by the population we get GDP Per Capita which is the average income per
person in Grenada for a period of time. Since 1978 Grenada has seen a massive
explosion in GDP Per Capita from US $912 in 1978 to $9,689 in 2023 as shown in table
1. The figures imply that whereas in 1978 Grenadians had an average income of $204
EC per month or $2,448 EC a year, that has expanded to$2,155 per month or $25,860
EC per year by 2023, which represents a tremendous improvement in material living
standards. GDP Per capital is an average across the entire population and of course in
reality many people in Grenada earn more than this and many earn less, but it gives us
an average picture and we can track that average over time. We do not have any data
on income distribution in Grenada which is extremely important in tracking economic
progress because while average income can grow most of that growth can be within
certain groups leaving a lot of the population behind. An analysis of income distribution
in Grenada sounds like a perfect research project for some Grenadian graduate
students to undertake at the UWI Five Islands campus.
An analysis of the trends in GDP Per Capita in Grenada shows a massive surge
in the immediate post-independence period and GDP per capita more than doubled
during the 1978 to 1987 decade. However, it is clear that after this period the growth in
GDP Per capita has been quite modest and especially weak since 2008. Even though
the growth rate would have been affected by the mathematical fact that GDP would then
be growing from a larger base, the 33% increase in the decade 2008 to 2017 is most
anemic compared to the 113% growth in the decade 1978 to 1987 (see table 2). In
addition to the slowing growth, Grenada’s improvement in GDP Per Capita since
independence lags behind a number of its Eastern Caribbean Currency Union (ECCU)
counterparts as shown in table 1. To further delve into the factors behind the trends in
GDP Per capita we turn our focus to the growth in GDP itself.
A country’s GDP Per Capita as mentioned earlier is its GDP divided by its
population. Grenada’s population has been relatively stable over the years since
independence therefore the trends in Per Capita GDP are largely driven by the growth
in GDP, therefore we now shift to focus on the growth in Real GDP. Real GDP is where
GDP is adjusted to remove the effects of inflation. As seen in table 3 economic growth
in Grenada averaged 3.06% per year over the 1978 to 2023, which is the second lowest
among the major economies in the ECCU. Over the 46 year period the economy grew
by a combined 140%, again the second lowest among the major economies in the
ECCU. The 1978 to 1987 and 1998 to 2007 stand out as two periods of strong and
sustained growth in Grenada since independence and account for 67.2% of the growth
achieved between 1978 and 2023 over the last 50 years (see table 3).
Over the 1978 to 2023 time period Grenada experienced 10 recessions (years of
negative GDP growth) which was the second largest number of recessions among the
major economies in the ECCU. Economic recessions in Grenada have tended to be
associated with hurricanes or external shocks such as the Gulf War (1991), September
11 terrorist attacks (2001), Sub-prime Mortgage Crisis (2008/2009) and the Covid 19
pandemic (2020) (please see table 5 for details). However, with the exception of the
recession following the 2008 global financial crisis and the Covid 19 pandemic,
recessions in Grenada have tended to be short and mild.
The major challenge for Grenada appears to be the relatively modest levels of
growth achieved in non-recession years and the vulnerability to external shocks which
then reverse the moderate gains made in the non-recession years. The factors behind
Grenada’s relatively weak economic growth in non-recession years (compared to other
major ECCU economies) and weak growth since 2008 despite its many assets, need to
be researched and form the basis for future policy initiatives (again this seems like a
perfect project for some bright graduate students from Grenada to undertake at the UWI
Five Islands campus). The evidence may also suggest an urgent need to find new
avenues to “spice up” GDP Per Capita as the current model appears to have stalled,
unable to create significant new wealth and facilitate catching up with other major ECCU
economies.
Policy Challenges Next Fifty Years
Firstly, Grenada needs to invest in building up policy buffers especially in the
form of a Debt to GDP Ratio of 60% to minimize the negative effects of the inevitable
external shocks. Secondly, policy makers need to focus on improving the ease of doing
business, the efficiency of public services, improving physical and human capital and
removing obstacles in the way of the entrepreneurs and investors who can identify and
execute the new growth opportunities needed to “spice up” the rate of economic growth
and to build up reserves for the inevitable bad years from hurricanes and/or external
shocks. Thirdly, in pursuing new growth opportunities policymakers should prioritize
inclusive growth opportunities so that new wealth is generated that is spread across a
broad cross section of the society.
Prof. C. Justin Robinson (Professor of Finance and Principal, UWI Five Islands Campus, Antigua &
Barbuda)
Table 1. Gross Domestic Product Per Capital 1978 – 2023 (US $)
1978 2023 % Change $ Change
Antigua and Barbuda $ 1,366 $ 19,919 1358% $ 18,553
Dominica $ 788 $ 8,351 959% $ 7,562
Grenada $ 921 $ 9,689 951% $ 8,767
St. Kitts and Nevis $ 1,137 $ 20,262 1682% $ 19,124
St. Lucia $ 1,400 $ 13,030 830% $ 11,630
St. Vincent and the
Grenadines $ 572 $ 9,125 1493% $ 8,552
Source: World Development Indicators
Table 2: Grenada’s Growth In Per Capita Income Across Decades
Time Period Cumulative Real GDP Growth
1978 to 1987 113%
1988 to 1997 58%
1998 to 2007 63%
2008 to 2017 33%
2018 to 2023 10%
Table 3. Annual Growth Rate In Real GDP ECCU (%)
Ant & B Dom Gre SKN SLU SVG
Annual Average 3.64 2.31 3.06 3.79 3.33 3.19
Max Annual 12.71 13.38 13.28 11.18 11.18 14.07
Min Annual -17.50 -18.36 -13.76 -14.53 -24.37 -4.47
Cumulative (1978 to 2023) 167.63 106.34 140.73 174.20 153.01 146.53
# of Recessions 9 11 10 7 9 5
GDP Losses From
Recessions -48.87 -50.85 -32.05 -25.60 -36.69 -11.44
Table 4. Grenada Cumulative Real GDP Growth by Decade
1978 to 1987 45.54
1988 to 1997 22.60
1998 to 2007 49.17
2008 to 2017 17.75
2018 to 2023 5.67
Table 5. Annual Growth Rate in Real GDP
Year
Real GDP
Growth Year
Real GDP
Growth Year Real GDP Growth
1978 5.34 1993 -1.96 2008 0.95
1979 5.60 1994 1.69 2009 -6.61
1980 -0.53 1995 2.13 2010 -0.51
1981 1.53 1996 4.44 2011 0.76
1982 4.12 1997 5.02 2012 -1.15
1983 3.63 1998 11.75 2013 2.35
1984 3.57 1999 6.90 2014 7.34
1985 5.98 2000 4.89 2015 6.45
1986 7.19 2001 -2.02 2016 3.74
1987 9.10 2002 3.44 2017 4.44
1988 2.97 2003 9.46 2018 4.36
1989 3.77 2004 -0.65 2019 0.68
1990 4.01 2005 13.28 2020 -13.76
1991 1.39 2006 -4.00 2021 4.69
1992 -0.85 2007 6.12 2022 5.80
2023 3.90
