Tourism continues to be the dominant activity in the economy accounting directly or indirectly for more than half of GDP. In 1999 the budding offshore financial sector was seriously hurt by financial sanctions imposed by the US and UK as a result of the loosening of its money-laundering controls. The government has made efforts to comply with international demands in order to get the sanctions lifted. The dual island nation's agricultural production is mainly directed to the domestic market; the sector is constrained by the limited water supply and labor shortages that reflect the pull of higher wages in tourism and construction. Manufacturing comprises enclave-type assembly for export with major products being bedding, handicrafts, and electronic components. Prospects for economic growth in the medium term will continue to depend on income growth in the industrialized world, especially in the US, which accounts for about one-third of all tourist arrivals.
