Grenada has a strong legal framework for business. Generally, the presence of a comprehensive investment incentive regime, stable economy, existing trade agreements, and responsive investment promotion experts contributes to a positive investment climate. In 2020 and 2021, however, Grenada’s tourism-driven economy was severely impacted by the global COVID-19 pandemic. Recovery will be a multi-year process.
The country recorded negative 11.2 percent growth in 2020, a stark contrast to the average 4 percent growth experienced from 2013 to 2019. Tourism and private tertiary education are the main revenue earners and were the hardest hit sectors. In the second quarter of 2020, the unemployment rate almost doubled to 28.4 percent, compared to 15.1 percent in the fourth quarter of 2019. In 2020, Grenada lost more than 14,000 jobs from a labor force of approximately 50,000. The government experienced a significant shortfall in tax revenues and is likely to run a deficit in 2021. Although the debt-to-GDP ratio fell from 108 percent in 2013 to just under 60 percent by the end of 2020, it is projected to rise to 73 percent in 2021 due to the recent increase in long-term concessionary loans taken out to finance COVID response and economic stimulus programs.
The government forecasts 6 percent GDP growth in 2021 driven by construction and major public and private sector projects through Grenada’s Citizenship by Investment (CBI) program. Despite the pandemic, the Grenada Investment Development Corporation (GIDC) and CBI program consistently received applications for investment incentives and projects in 2020. During the first quarter of 2020, CBI applications were 25 percent above 2019 figures despite an anticipated decline. According to the Ministry of Finance, the CBI program generated $6.18 million in revenues for the government in the fourth quarter of 2020.
In 2020, the International Center for the Settlement of Investment Disputes (ICSID) tribunal ordered the government of Grenada to repurchase the shares owned by U.S. company WRB Enterprises, the former majority shareholder in Grenada’s sole electricity company, at a valuation of approximately $74 million. The arbitration stemmed from a 2016 law that liberalized the energy sector in Grenada, which was found to abrograte WRB’s monopoly and thus allowed WRB to require the government of Grenada to repurchase its shares. Following the ICSID ruling, the government of Grenada repurchased the WRB shares in a negotiated settlement.
The government of Grenada has a strong interest in climate resilience initiatives, increasing the use of renewable energy, and developing the blue economy (broadly defined as the sustainable, environmentally sensitive use of ocean resources for economic growth and job creation). Other international investments include projects in construction, retail, duty free outlets, and agriculture. The Grenada parliament made legislative revisions to the acts governing value added tax, property transfer tax, investment, excise tax, customs (service charge), and bankruptcy and insolvency. The government also launched an innovative Investment Incentives Regime intended to streamline bureaucratic and legal processes. This regime improves transparency, equitable treatment of investors, and adherence to the rule of law, thus bolstering Grenada’s marketability as an investor-friendly climate.
|TI Corruption Perceptions Index||2020||52 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||146 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||41 (outward)
|World Bank GNI per capita||2019||USD $9,840||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|