Country Report Jamaica June 2009

Outlook for 2009-10

• The governing Jamaica Labour Party (JLP) will have few tools at its disposal to lessen the recession and will focus on maintaining fiscal austerity to keep Jamaica's massive public debt manageable.
• 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 in 2009, as import prices and consumer demand weaken, but currency devaluation and new consumption taxes will keep it stubbornly? high.
• The current-account deficit, although remaining large, will narrow markedly in 2009 as import spending contracts owing to falling private consumption.

Monthly review

• The Supreme Court has ordered another by-election in the North East St? Catherine parish represented by a JLP member of parliament (MP), Gregory Mair. The election may act as a bellwether for the JLP's popularity.
• The government has negotiated a stand-by arrangement with the IMF, granting it a discretionary line of credit. It may call on it should the balance of payments or fiscal balance deteriorate.
• Derick Latibeaudiere, the governer of the Bank of Jamaica (BoJ, the central bank), indicated that the BoJ will continue to pursue a tight monetary policy, while focusing on controlling exchange rate volatility.
• The Planning Institute of Jamaica (PIOJ) estimated that real GDP declined by 2.8% year on year in the first quarter of 2009, as the mining sector and other goods producing sectors posted large contractions.
• The Bank of Jamaica estimates that import volumes contracted markedly in the first quarter of 2009. On account of the higher than expected contraction in imports, we have revised up our GDP contraction forecast to 3.5%.
• Inflation continued to moderate in April, growing by 0.4% compared with March (11.2% year on year). However, rising consumption taxes and increased import prices indicate that inflation may pick up in the second quarter.

Source: Country Report

This report covers the following industry codes:
SIC Code: 39;10
NAICS Code: 31;212