Editing Economy of Grenada (section)

==Economic Performance==

After experiencing [[Gross domestic product|GDP]] growth averaging nearly six percent a year in the late 1990s, economic growth declined considerably after 2001 as a result of  a decline in the tourism industry following the [[September 11 attacks|September 11, 2001, terrorist attacks]], and damages caused by several [[Tropical cyclone|hurricanes]].

The [[economy]] of Grenada was brought to a near standstill in September 2004 by Hurricane Ivan, which damaged or destroyed 90 percent of the country's buildings, including some tourist facilities. In July 2005, [[Hurricane Emily (2005)|Hurricane Emily]] struck Grenada who was still recovering from the impact of Hurricane Ivan. Besides the negative impacts to the tourism industry, the two devastating hurricanes destroyed or significantly damaged a large percentage of Grenada's tree crops, which may take years to recover.

As the damage of [[Hurricane Ivan]] to the economy exceeded 200 percent of GDP, economic growth registered a negative growth of three percent in 2004, compared with a positive growth rate of 5.8 percent in 2003. Although signs of recovery have been seen in Grenada after the damage inflicted by Hurricanes Ivan and Emily, economic conditions remain difficult; GDP is projected at a growth rate of only one percent for 2005.

With the absence of sustained growth, the fiscal situation started to deteriorate after 2001, reflecting a continued expansionary policy with a sharp increase in spending on social sectors, the wage bill, and goods and services. As a result, the fiscal deficit rose to 8.5 percent of GDP in 2001 from 3.2 percent in 2000. The fiscal situation remained shaky in 2002, with the deficit widening to 19.2 percent of GDP due to dampened output from [[Hurricane Lili|Tropical Storm Lili]]. As the economy began to recover in 2003, the government began to take steps for fiscal consolidation, and the fiscal deficit fell to 4.8 percent of GDP. Progress in fiscal consolidation was impeded in 2004 as the government policy changed abruptly to post-hurricane relief.  Meanwhile, government revenues decreased as a result of the impact of the hurricanes on the economy.

While economic growth has declined since 2001 due to adverse shocks, including a slowdown in the global economy and natural disasters, fiscal policy became more expansionary when privatization receipts declined. As a result, [[Government debt|public debt]] has increased sharply to over 100 percent of GDP since 2002; it remained as high as near 130 percent of GDP in 2004.

Grenada is a member of the [[Eastern Caribbean Central Bank]] (ECCB), which manages [[monetary policy]] and issues a common currency for all the member countries. Inflation has remained low and stable within the framework of the currency board arrangement, with inflation averaging at two percent over the past 15 years.