Caribbean & Central America - March 2012 (ISSN 1741-4458)

It is estimated that in the final quarter of 2011, the Jamaican economy grew by 1.7% year-on-year. If confirmed, this would mean that gross domestic product (GDP) growth for 2011 is 1.5%, the first annual advance since 2007.

Further expansion is expected in the first quarter of 2012, but the wide estimated range of 0.5-1.5%, provided by the Director-General of the Planning Institute of Jamaica, Dr Gladstone Hutchinson, suggests continuing uncertainty. He says that the expected slowdown in the rate of expansion from the December quarter “reflects the normalization of output levels in industries such as mining and quarrying, tourism and agriculture”. In the December quarter, agriculture had registered a 16.4% increase, with mining and quarrying up 8.2%, manufacturing up 2.1%, and construction growing by 1.0%.

With government expenditure accounting for approximately 40% of GDP, the other looming uncertainty is the impact of further budget cuts. The new People’s National Party (PNP) government under Portia Simpson-Miller, elected in December, has reiterated its commitment to reducing the national debt, currently standing at J$1.619 trillion (US$18bn), which is more than 130% of GDP. On 21 February, in a second round of supplementary estimates, the new government tabled J$22.4bn (US$259m) of further cuts, to reduce total expenditure to J$525.2bn (US$6bn), with J$12.5bn (US$145m) cuts in capital expenditure and J$9.8bn (US$113m) in recurring expenditure.

An IMF team is due in Jamaica from 7-20 March to conduct a review which will serve as the start of formal negotiations for a new programme. Just ahead of this visit, the prime minister said that Jamaica would benefit from a Greek-style bailout. She said: “If they [the IMF] could give a bailout like Greece, lord have mercy, you would see Jamaica grow and flourish.” However, she added: “We know we would never be able to get the same level as Greece, but if we could get some consideration from countries or the IMF, we would be on our way.”