Econ­omy of Antigua and Barbuda

Antigua and Barbuda’s econ­omy is service-​based, with tourism and gov­ern­ment ser­vices rep­re­sent­ing the key sources of employ­ment and income. Tourism accounts directly or indi­rectly for more than half of GDP and is also the prin­ci­pal earner of for­eign exchange in Antigua and Bar­buda. How­ever, a series of vio­lent hur­ri­canes since 1995 resulted in seri­ous dam­age to tourist infra­struc­ture and peri­ods of sharp reduc­tions in vis­i­tor num­bers. In 1999 the bud­ding off­shore finan­cial sec­tor was seri­ously hurt by finan­cial sanc­tions imposed by the United States and United King­dom as a result of the loos­en­ing of its money-​laundering con­trols. The gov­ern­ment has made efforts to com­ply with inter­na­tional demands in order to get the sanc­tions lifted.

The dual island nation’s agri­cul­tural pro­duc­tion is mainly directed to the domes­tic mar­ket; the sec­tor is con­strained by the lim­ited water sup­ply and labor short­ages that reflect the pull of higher wages in tourism and con­struc­tion. Man­u­fac­tur­ing com­prises enclave-​type assem­bly for export with major prod­ucts being bed­ding, hand­i­crafts, and elec­tronic com­po­nents. Prospects for eco­nomic growth in the medium term will con­tinue to depend on income growth in the indus­tri­al­ized world, espe­cially in the US, which accounts for about one-​third of all tourist arrivals.

Esti­mated over­all eco­nomic growth for 2000 was 2.5%. Infla­tion has trended down going from above 2 per­cent in the 1995 – 99 period and esti­mated at 0 per­cent in 2000. Con­struc­tion, bank­ing and insur­ance, com­mu­ni­ca­tions, and whole­sale and retail trade sec­tors were the main con­trib­u­tors to eco­nomic growth. The econ­omy is expe­ri­enc­ing its third con­sec­u­tive year of high growth, dri­ven by a con­struc­tion boom in hotels and hous­ing, as well as projects related to the 2007 Cricket World Cup. The tourism and hos­pi­tal­ity sec­tor has largely recov­ered after the decrease in tourism fol­low­ing the Sep­tem­ber 11, 2001 ter­ror­ist attacks. It posted a strong per­for­mance in 2004, and in 2005 the sec­tor was esti­mated at 50% of GDP.

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 that 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).

FOR­EIGN RELA­TIONS
Antigua and Bar­buda main­tains diplo­matic rela­tions with the United States, Canada, the United King­dom, and the People’s Repub­lic of China, as well as with many Latin Amer­i­can coun­tries and neigh­bour­ing East­ern Caribbean states. It is a mem­ber of the United Nations, the Com­mon­wealth of Nations, the Orga­ni­za­tion of Amer­i­can States, the Orga­ni­za­tion of East­ern Caribbean States, and the East­ern Caribbean’s Regional Secu­rity Sys­tem (RSS).