St. Vincent and the Grenadines, the archipelago in the Lesser Antilles, occupies a total land area of 389 sq km. St Vincent is of volcanic origin, and is home to one of the most dangerous volcanoes in the Caribbean, La Soufriere.
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St. Vincent and the Grenadines economy is largely supported by income from agricultural production, which generates the majority of the country’s exports. Consequently, the stability of the economy is plagued by natural disasters such as landslides, flooding and volcanic activity.
Before the COVID-19 pandemic, St. Vincent and the Grenadines had a combined growth of 6.4% from 2015 to 2018. 2019 started a downhill trajectory with a 0.5% GDP growth and plunged to -2.7% in 2020.
The debt-to-GDP ratio increased to 84.8%, from 75.2% in 2019. This surge was underpinned by government spending on health, the social sector and other sectors, in line with its fiscal stimulus policy to fight the COVID-19 pandemic.
The fiscal stimulus package included provisions for a temporary suspension of loan and mortgage payments, supplementary incomes to workers, and transfers to small businesses, cultural workers and farmers. To meet the higher financing needs, the Government received support from its multilateral development partners.
Economic stability in the country further declined in 2021 with the volcanic eruption of the La Soufriere Volcano in St Vincent on April 9th. Thick plumes of volcanic ash covered the country and neighboring Caribbean countries causing major damages to the crop industry and mass evacuation of communities surrounding the volcano along with evacuation out of the country.
Shortly after the eruption, grave flooding affected the country which called for expensive intervention by the government as major damages were caused to the crop industry and infrastructure resulting in high cost of mass cleanup efforts.