As a small and middle-income island economy, Grenada was hit hard by the 2008 global financial crisis. Real gross domestic product (GDP) contracted by more than 8 per cent between 2009 and 2012, while fiscal deficit more than doubled as a share of GDP. Grenada’s economic recovery accelerated in 2014, driven by the strong performance of tourism and agriculture.
Despite high human development indexes, Grenada has not succeeded in reducing poverty to levels compatible with its level of per capita income.
There are areas of extreme poverty in Grenada and a wide disparity of living standards across the country. According to the latest Country Poverty Assessment, 38 per cent of the population is considered to be poor and 15 per cent is considered to be vulnerable (people who are susceptible to become poor as a consequence of an unanticipated event).
The causes of poverty in Grenada are complex and related to historical and economic factors, including the vulnerability of the economy due to the country’s small size and its exposure to natural disasters. Unemployment, especially among women and youth, remains high. Other causes of rural poverty include lack of access to productive organizations, education, markets and financial support services.
Tropical storms and hurricanes regularly cause serious damage to infrastructure and contribute to the cycle of poverty. Grenada’s mountainous, volcanic topography can lead to severe soil erosion, and its mountains create a physical barrier across the island.
In Grenada, IFAD loans build on the government's poverty reduction strategy by increasing employment and income levels in rural areas, both through agricultural and non-agricultural activities, and by supporting the adoption of Climate Smart Agricultural (CSA) practices.
Activities target poor people who live in rural areas, with a special focus on youth.
IFAD’s approach and strategy is aligned with the National Agriculture Plan 2015-2030.
Key activities include:
- increasing agricultural production and exports, strengthening the linkage between agriculture and tourism;
- enhancing food security by reducing the food import bill;
- strengthening resilience and improving preparedness to address CC impacts and extreme events;
- investment in infrastructure and institutional and human resource capacity development; and
- fostering partnerships with regional counterparts and development partners.
- Hurricanes Ivan (2004) and Emily (2005) severely damaged the agricultural sector – particularly nutmeg and cocoa cultivation which had been a key driver of economic growth.
- Overall, IFAD has financed three projects in Grenada for a total cost of US$18 million (including IFAD financing of US$9 million). The Artisanal Fisheries Development Project (AFDP), the Grenada Rural Enterprise Project (G-REP) and the Market Access and Rural Enterprise Programme (MAREP), all co-financed with the Caribbean Development Bank (CDB).