Top 3 industries that shape Anguilla economy

Located in the eastern Caribbean Sea, Anguilla is a charming set of islands, a part of British overseas territory. Aside from being a renowned tourist destination with a peaceful atmosphere and magnificent beaches, Anguilla is also a growing offshore financial hub that has attracted thousands of international investors around the world to come and conduct business.

In order to achieve this status, Anguilla has developed a strong and reliable economy that can support international tradings and services in an efficient way. In this article, you will learn about the top 3 industries that shape Anguilla’s economy.

Overview of Anguilla economy

Although Anguilla is a small island compared to other islands, in the 1980s it was among the top regions with the highest growth index. Since the early 1990s, Anguilla has consistently ranked as one of the most prominent offshore financial regions in the world.

Anguilla suffered a huge setback in 2017 when a category 5 hurricane Irma hit the territory directly, costing EC$880.4 million worth of damage, or 100% of its GDP. As a result, economic activity fell by 6.6% in 2017, whereas post-Irma rehabilitation efforts boosted the construction industry, resulting in a 10.9% increase in GDP in 2018.

In 2019, the island territory has achieved an admirable goal, as Anguilla GDP peaked at US$ 307 million and Anguilla GDP per capita reached more than US$ 23.000. The main figures in international trade in services can be mentioned as Transportation accounted for 2.1%, Tourism accounted for 30.5% and 67.4% was for other services. The top 5 countries trading with Anguilla in 2020 include the US, Chile, Guyana, South Korea and Uruguay.

In 2020, due to the COVID-19 pandemic, Anguilla economy was hit hard, the most severe damage ever recorded. Anguilla GDP growth rate in 2020 dropped to -28%, while Anguilla GDP per capita suffered a slight decrease to US$ 20.438. However, in 2021, the economy is expected to increase by 6%, with a strong medium-term outlook. With the sale and rehabilitation of CuisinArt Resort and Golf Course, the resurfacing of the Clayton J Lloyd International Airport runway, and the continuation of Anguilla Programme reconstruction projects will all assist to boost the growth of Anguilla economy. Revenues should be lifted by economic recovery and further budget support, allowing the government's finances to stay steady.

Top 3 industries in Anguilla

1. Tourism

With 33 pristine white beaches and coconut trees, surrounded by clear blue waters and magnificent coral reefs, no wonder tourism, especially luxury tourism, is the main foundation of Anguilla economy. According to Unicef’s report on Anguilla, this sector is estimated to contribute 37% of the territory’s total economic activity. The tourist industry has contributed an average of 23% of Anguilla GDP over the last five years. During the same time period, the real estate, rental, and business activities industry provided 14% of GDP, while the transportation, storage, and communication industry and the financial sector each contributed 11%.

Since there are no direct flights linking Anguilla to its major tourism source markets (the United States, Europe, and Canada), visitors usually arrive through Sint Maarten, which serves as Anguilla's main port of entry and transit hub. They can also fly to neighboring Caribbean islands and then move to Anguilla via small charter plane or ferry.

The potential strength of tourism has significantly contributed to the promotion of related industries such as construction, services, restaurants, hotels and many more. This industry has become the backbone of the overall growth of Anguilla economy. It is predicted that in the upcoming years, after the COVID-19 pandemic, Anguilla's tourism will recover quickly, as major countries that are the main source markets such as the US and Europe have allowed to reopen flights, thereby making the average income per capita continue to grow as well as raising this economy up further.

2. Offshore financial services

For over two decades, Anguilla has delivered cutting-edge financial and commercial services to a wide local and international clientele, including corporations, governments, and individuals, as a self-governing British territory. The territory offers one of the most favorable tax treatments in the world, with no corporate tax, dividend tax, capital gain tax, or other directly imposed taxes for both domestic and international businesses. Individuals are also exempt from paying gift or inheritance taxes. The island's principal source of revenue is a consumption tax, which is readily paid by some of the world's least cost-conscious tourists.

There are many offshore company structures in Anguilla, the most common of which are Limited Liability Company (LLC) and International Business Company (IBC). Through a very flexible organizational structure, both provide asset protection, security, and anonymity services to businesses in this territory. A single member is necessary to start an offshore corporation, which can be formed easily and at extremely low costs. International companies in Anguilla enjoy a flexible corporate management structure that allows them to tailor their business organization to their specific demands.

Anguilla's offshore laws are governed by an English Common Law system, and it has passed a total of five pieces of legislation that encompass all of its offshore financial market. Anguilla's policies are designed to encourage international investors by allowing for minimal local and reporting requirements. These factors have given offshore companies the freedom to relocate and do business without having to deal with bureaucratic red tape or complicated financial and auditing procedures.

3. Fishing

Anguilla, located in the Caribbean Sea, has its advantages as a low-lying island with some of the world's most beautiful coral reefs and beaches. As a result, fishing has become an integral sector of Anguilla economy, serving both as a tourism activity as well as a commercial industry.

Anguilla GDP by fisheries contributions was EC$2.55 million in 1987, compared to EC$5.1 million in 1981. According to preliminary data, fishing contributed 2.26% to the total GDP in 2012. The contribution of the fishing industry to the island's GDP has the potential to be larger, and as it stands, there is room for improvement that would benefit the Government of Anguilla (GOA) and its citizens.