The St. Lucian economy is projected to grow by 1.7 per cent in 2025 as the country navigates a temporary slowdown in tourism before an expected rebound in 2026.

In its latest Article IV consultation concluded on January 12 2026, the International Monetary Fund noted that St Lucia has maintained a robust performance in recent years. 

Following a strong expansion of 4.7 per cent in 2024, current growth is being sustained by strong construction activities, domestic demand, and credit expansion, despite weaker performance in the tourism sector.

The fund expects the economy to bounce back to 2.3 per cent growth in 2026 as tourism activity picks up. 

Over the medium term, growth is projected to stabilise at 1.5 per cent as major infrastructure projects reach completion.

The report highlighted that inflation is projected to rise to 0.8 per cent in 2025, partly due to higher import costs, after falling by 0.5 per cent in 2024. 

Unemployment reached a historic low of 10.8 per cent in 2024, though it moved up to 13.4 per cent by the second quarter of 2025. 

While public finances have improved with three consecutive years of primary surpluses, debt is projected to stabilise at around 77 per cent of Gross Domestic Product in the medium term.

Despite the positive momentum, the International Monetary Fund warned that St Lucia continues to face long-standing hurdles, including weak productivity and income levels that have diverged from those in the United States over recent decades. 

The outlook remains vulnerable to external risks such as geopolitical tensions and trade uncertainties which could weaken foreign investment. Domestically, the economy remains highly susceptible to natural disasters and the ongoing impacts of climate change. 

To ensure long-term sustainability, the fund recommended that the government focus on reducing public debt to reach the regional target of 60 per cent of Gross Domestic Product by 2035.