Country Report Jamaica February 2009

Outlook for 2009-10

• The governing Jamaica Labour Party (JLP) will be under pressure to jumpstart economic growth. Reducing violent crime will also remain a government priority, although this will prove challenging in the midst of recession.
• Jamaica’s massive public debt burden will inhibit any further fiscal expansion. The fiscal deficit will widen as sharply weakening economic activity constrains revenue growth and debt-servicing costs rise.
• The recession will deepen in 2009 as household consumption declines and recession in the developed world curbs export demand. The Economist Intelligence Unit expects only modest real GDP growth in 2010.
• Inflation will fall to single digits in 2009, as import prices and consumer demand weaken, but will remain stubbornly high.
• The current-account deficit will remain large in the forecast period, but will narrow in 2009 as import spending contracts owing to falling private consumption.

Monthly review

• Fears are rising that crime could skyrocket as a result of rising unemployment and falling remittances as the economy falls further into recession. More than 70 people were murdered in the first 20 days of 2009.
• The government introduced a six-point fiscal and debt sustainability programme aimed at reducing Jamaica's massive debt burden and stimulating economic growth. Several multilateral lenders have already pledged funding.
• The public finances continue to show signs of stress; in the first nine months of 2008/09 (April-March) revenue was 8% below budget, mainly owing to falling bauxite prices and lower tax revenue following falling consumer spending.
• Annual consumer price inflation continued to ease in December, falling to 16.8% as lower energy prices fed through to lower utilities and transportation costs. Monthly inflation was just 0.1% in December.
• Levels of bad debt continued to rise to their highest nominal levels since the financial crisis of the 1990s. Financial sector non-performing loans totalled J$8.9bn (US$101m), 48% higher than the year-earlier period in nominal terms.
• Jamaica posted a surprisingly strong performance in tourist arrivals in January despite the global economic downturn. Overall arrivals rose by 3.4% year on year, to around 140,000, an all-time high for the month of January.

Source: Country Report

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