USD14.362bn (World ranking 121, World Bank 2014)
2.72mn (World ranking 140, World Bank 2014)
|Form of state
||Andrew Holness (Jamaica Labour
- Numerous supports from
international institutions, namely the World Bank, the
- Natural resources and
- Fairly high remittances
from the diaspora -> nearly 20% of GDP (71% of
remittances come from the USA)
- High dependence on US economy.
- Sensitiveness to commodity prices (Bauxite
notably: 47% of exports).
- Little diversified economy
- High public debt
Better macroeconomic environment, but still
too low growth
Since May 2013 Jamaica has implemented economic reform programs
supported by the IMF. Administrative and tax policy reforms led to a
bold effort to reorient the tax system to indirect taxation.
Furthermore, the government has pursued strict adherence to fiscal
discipline. PetroCaribe debt buyback has helped to reduce the public
debt. The IMF program is due to run its course in April 2017, but
discussions on a successor program are ongoing.
The economic reforms taken over the past 3 years seem to be paying off
as the economy is showing some rather positive signs. Growth returned
in positive territory as soon as 2014 (+0.5%) and strengthened to +1.1%
in 2015, while inflation rate is at a record low.
Despite a better macroeconomic framework, growth will remain subdued at
+1.5% in 2016 and +1.9% in 2017. Exports will continue to be hampered
by low commodity prices (bauxite and sugar) and by low growth in the
Better fiscal and external positions
The fiscal and external imbalances have been addressed head-on under
the IMF program. Thanks to several austerity measures, the fiscal
accounts is estimated to be almost balanced in 2016 (-0.2% of GDP). A
small surplus in 2017 (+0.1% of GDP) is a realistic target. Back in
2011 fiscal accounts stood at an unimpressive -5%.
The current account deficit is expected to narrow to -2.9% of GDP
in 2016 and -2.6% in 2017, down from -12% in 2011. Low oil prices,
increasing tourism revenues and stronger migrants’ remittances also
contributed. Remittances represent nearly 20% of GDP in 2015, with the
US being the main source country (71% of total). Having said that, debt
levels remain worrying. Estimations for 2016 place public debt at 123%
of GDP and external debt at 108% of GDP. The former should begin
decreasing as of 2017.
Rating agencies upgraded Jamaica, allowing the country to return to
capital markets and issue bonds for USD800mn in 2014 and USD2bn in
2015. The country is yet to rid its debt of junk’ status. The
Labour party won the February 2016 elections by a small margin. The new
government remains committed to reforms under the IMF program, with a
focus on fiscal discipline.
Business environment gradually improving
Jamaica ranks 4th out of 139 countries in the World’s Bank Doing
Business index, higher than Panama (69th), Guatemala, Argentina, and
Brazil. It performs well on the ease of getting credit (5th),
protecting investors (57th) and enforcing contracts (41st). But
shortcomings such as registering property 106th) and paying taxes
(92nd) remain. Violence and crime are still important issues. Jamaica’s
homicide rate is the second highest among 86 surveyed countries. Lack
of infrastructure and inadequate education are important drags on
economic productivity and growth potential.
Last review: 09/27/2016