Country Report Jamaica December 2008

Summary

The governing Jamaica Labour Party (JLP) will be under pressure to produce results in relation to its anti-crime platform. The issue is likely to dog the JLP to the same extent that it troubled its predecessor.
Boosting GDP growth is a major policy goal, but will prove impossible as the domestic economy goes into recession and the global economy slows. Jamaica's massive public debt burden will inhibit any fiscal expansion.
The fiscal deficit will widen as a percentage of GDP as sharply weakening economic activity constrains revenue growth. Expenditure will remain vulnerable to higher than budgeted interest payments or wage demands.
After GDP contracts slightly in 2008, the Jamaican recession will deepen in 2009 as household consumption declines and recession in the developed world curbs export demand. We expect only a modest recovery in 2010.
Inflation has been driven up by hurricane damage and high imported food and fuel prices. Inflation is projected to fall to single digits in 2009, as import prices and consumer demand weaken, but will remain stubbornly high.
The current-account deficit will remain extremely large in the forecast period, but will narrow in 2009 as import spending contracts owing to the recession.

Parliament voted to end the moratorium on the death penalty. The government feels pressure to crack down on violent crime as the murder rate climbs alarmingly.
The tourism promotion board resigned in November and will now be headed by John Lynch, the tourism board chairman. The government will launch a US$3m international advertising campaign to address slackening tourism.
The Bank of Jamaica (BoJ, the central bank) sold 20% of reserves in an attempt to stop the slide (9% since September 1st) in the Jamaican dollar. Reserves fell to US$1.8bn, covering just 2.1 months of imports.
The fiscal deficit was J$5.8bn in September, bringing the year-to-date deficit for the 2008/09 fiscal year (April-March) to J$25.4bn. The deficit is less than budgeted, owing to expenditure cuts, rather than increased revenue.
Preliminary economic data showed no growth for the third quarter against the same period last year. The poor result means that GDP contracted by 0.3% year on year in the first three quarters.
The tourist sector contracted, with visitors falling by 6% year on year. Output of hotel and restaurants shrank by 1%. The Jamaica Hotel and Tourist Association made dreary projections for early 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;70
NAICS Code: 52;72