Country Report Jamaica November 2008

Outlook for 2009-10

• The Jamaica Labour Party (JLP) government's anti-crime platform will be under pressure to produce results; its popularity will soon wane if it fails. The issue is likely to dog the JLP to the same extent that it troubled its predecessor.
• Boosting GDP growth will remain a major policy goal, but will prove increasingly difficult as the global economy slows. Jamaica's massive public debt burden will hinder much-needed social and infrastructural investment.
• 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.
• Following annual growth of less than 1% in 2008, growth will remain weak in 2009 as export demand is hampered by a recession in the US and domestic monetary tightening; we expect only a modest recovery in 2010.
• Inflation has been driven up by the lingering impact of hurricane damage and by high imported food and fuel prices. Inflation will remain in double digits during 2008, but a disinflationary trend should take hold in 2009.
• The current-account deficit will remain extremely large in the forecast period, as high oil prices continue to put upward pressure on the import bill.

Monthly review

• A task force was formed by the government in late October to monitor the impact of the global financial crisis on the Jamaican economy.
• The murder rate has continued to climb at an alarming rate. According to the latest police statistics, 1,241 people were murdered in the first nine months of 2008, a year-on-year increase of 28%.
• Jamaica's international Eurobond prices fell sharply in October, reflecting continued pressures on the international bond prices of emerging market countries around the world.
• With access to global capital markets virtually closed, Jamaica must raise an additional US$250m in order to meet its budgetary requirements by the end of the fiscal year; this will likely come from multilateral lenders.
• The Jamaican dollar came under intense pressure in October, prompting the BOJ to raise interest rates on open market operations; rates have now been increased by a total of 240 basis points since January.
• Consumer prices rose by an average 0.7% in September, the slowest rate since April 2007, easing 12-month inflation to 25.3% (from 26.6% in August).
• Gasoline prices are set to fall by J$2 per litre from November when PetroJam (the state oil company) begins to see ethanol-blended fuel.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60;49;13
NAICS Code: 212;52;22;211