The economy of Montserrat was severely disrupted by volcanic activity which began in July 1995. Prior to this date, the small island country of 12,000 had an export economy based on agriculture, clothing, electronic parts and plants, with a per capita gross national product of US3,000to8,000.Montserrathadaninternationalreputationasatouristgetaway,andtherecordproducerGeorgeMartinestablishedanimportantrecordingstudiothere,AssociatedIndependentRecording.DestroyedbyHurricaneHugoin1989,thestudiowasneverreestablished;however,MartinsubsequentlyhelpedfoundtheMontserratCulturalCentre,whichwasopenedin2007.SomeofthefundswereraisedinaLondonconcertcalled"MusicforMontserrat"(September15,1997).AcatastrophiceruptionofSoufrieˋreHillsinJune1997closedtheW.H.BrambleAirportandseaportatPlymouth,causingfurthereconomicandsocialdislocation.Two−thirdsoftheinhabitantsfledtheisland.Somebegantoreturnin1998,butlackofhousinglimitedthenumber.Theagriculturesectorcontinuedtobeaffectedbythelackofsuitablelandforfarmingandthedestructionofcrops.Prospectsfortheeconomydependlargelyondevelopmentsinrelationtothevolcanoandonpublicsectorconstructionactivity.TheUKlaunchedathree−year122.8 million aid program to help reconstruct the economy. Half of the island was expected to remain uninhabitable for another decade.
Today, Montserrat's main economic activity is in construction and government services which together accounted for about 50 percent of GDP in 2000 when it was EC76million.Incontrast,bankingandinsurancetogetheraccountedforlessthan10percentofGDP.Theunemploymentratein1998wasestimatedat6percent.Montserrat′sdomesticfinancialsectorisverysmallandhasseenareductioninoffshorefinanceinrecentyearswithonly11offshorebanksremaining.RealGDPdeclinedfromEC122 million in 1995 to about EC$60 million in 1999, with the rate of decline peaking at -21.
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