Grenada's agricultural economy is centred on the production of spices. The principal exports are nutmeg, cocoa, bananas and sugar cane. There are extensive timber reserves but exploitation is being strictly limited to prevent deforestation. The fishing industry has grown in recent years and now earns one-sixth of export earnings. There are thought to be some oil and gas deposits off the southern coast of Grenada, and attempts to locate them continue. Industry is confined to production of nutmeg oil and rum, as well as drinks, paint and paper. Tourism (particularly stopover and cruise-ship visitors) remains the most promising sector for the future growth of the economy, although it has grown only slowly since the mid-1990s. The economy has been generally depressed throughout that period, largely as a result of low world commodity prices, and approximately half the workforce is unemployed. The other main source of income for the island has been remittances from the estimated 100,000 Grenadians working abroad, mainly in the USA, Canada and Europe. Grenada also relies on foreign aid from the USA, the UK, Canada and the European Union. The UK and the USA are the island's main trading partners. Grenada is a member of the Caribbean trade bloc CARICOM and the Organisation of East Caribbean States.

Grenada is a Dominion within the British Commonwealth; the head of state is the British monarch, represented locally by a Governor. Executive power rests with the Cabinet while responsibility for legislation rests with a bicameral parliament comprising the 13-member Senate and the 15-member House of Representatives.