St. Kitts and Nevis was the last sugar monoculture in the Eastern Caribbean. Faced with a sugar industry that was finding it increasingly difficult to earn a profit, the Government of St. Kitts and Nevis embarked on a program to diversify the agricultural sector and stimulate the development of other sectors of the economy.

The government instituted a program of investment incentives for businesses considering the possibility of locating in St. Kitts or Nevis, encouraging both domestic and foreign private investment. Government policies provide liberal tax holidays, duty-free import of equipment and materials, and subsidies for training provided to local personnel. Tourism has shown the greatest growth. By 1987, tourism had surpassed sugar as the major foreign exchange earner for St. Kitts and Nevis.

The economy of St. Kitts and Nevis experienced strong growth for most of the 1990s but hurricanes in 1998 and 1999 contributed to a sharp slowdown. Real economic growth was 0.75 % in 2002 after a decline of 4.3 % in 2001. The economy experienced a mixed performance during 2002, with some sectors experiencing positive growth while others experienced varying levels of decline. The construction sector recorded a 4.51 % decline, manufacturing and hotels and restaurants also recorded significant declines of 4.01 and 9.89 % respectively, and sugar production fell by 5.1 %. Significant new investment in tourism, including a 648-room Marriott hotel and convention center that opened in December 2002, as well as continued government efforts to diversify the economy, are expected to improve economic performance. Consumer prices have risen marginally over the past few years. The inflation rate was 3%-4% for most of the 1990s.

St. Kitts and Nevis is a member of the Eastern Caribbean Currency Union (ECCU) The Eastern Caribbean Central Bank (ECCB) issues a common currency for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries.

St. Kitts is a member of the Eastern Caribbean Telecommunications (ECTEL) authority, which is developing the regulations to liberalize the telecommunications sector in the region by 2004..