Jamaica: Economic Outline

Economic Indicators

Jamaica is an upper-middle-income economy that is nevertheless struggling due to low growth, high public debt, and exposure to external shocks. According to the World Bank, the Jamaican economy surpassed its pre-pandemic level, expanding in real terms by 2.9% year-on-year in the first three quarters of 2023. Growth was driven by net exports from a record expansion in tourism and mining, while agriculture declined due to an extended drought. However, over the medium term, annual growth should hover around only 1.7% year-on-year due to waning global demand and constrained capital investments from fiscal austerity measures. Growth is projected to be supported by mining, tourism, and private investment in hospitality capacity and infrastructure.

In 2023, the Jamaican government maintained its commitment to fiscal consolidation while giving priority to social protection. Strong tax revenues bolstered the fiscal stance. However, despite these efforts, the fiscal account is estimated to have shifted from a surplus of 1.6% of GDP in 2022 to a deficit of 1.4% in 2023. This change was primarily due to heightened expenditure on wages and salaries following the approval of a three-year plan. The fiscal account is anticipated to return to surplus over the medium term, driven by enhancements in tax revenue and careful spending. Expenditure is forecasted to decrease slightly owing to reduced interest payments. Since 2013, the government (GOJ) has successfully implemented fiscal consolidation measures, reducing the public debt-to-GDP ratio by more than 60 percentage points to 75.5% in 2023 – the lowest level in 25 years. Public debt is expected to continue its downward trend, reaching 65.9% of GDP by 2026 (data World Bank). In January 2024, annual inflation surged to 7.4%, compared to 5.1% in October 2023, exceeding the Bank of Jamaica (BOJ)'s reference range of 5 ±1%. Over the last 30 years, real GDP per capita has increased at an average of just 1% per year, making Jamaica one of the slowest-growing developing countries in the world. The economy is diverse, but industries lack investment and modernization. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Therefore, Jamaica is exceptionally susceptible to external shocks due to its heavy dependence on imports and tourism. Tourism and agriculture, together constituting over half of the job market, remain particularly vulnerable to external influences, especially climate-related disruptions, which have the potential to hinder both growth and poverty alleviation efforts. While the financial sector maintains stability, robust capitalization, and profitability, it remains exposed to a range of potential shocks.

The World Bank estimated the unemployment rate at 5.4% in 2023, down from 5.5% one year earlier. In recent years, living conditions have improved in terms of access to basic services, education, and healthcare. Jamaica has been classified as an upper-middle-income country by the World Bank, with a GDP per capita (PPP) estimated at USD 11,939 in 2022. The poverty rate, defined as living on USD 6.85 per day, decreased from 13.9% in 2021 to an estimated 12.3% in 2023. However, concerns persist regarding the quality of employment due to significant informality, with 46.8% of non-agricultural employment in 2020 falling into this category. Moreover, average working hours remain lower compared to pre-pandemic levels.

Monetary Indicators	2016	2017	2018	2019	2020
Jamaican Dollar (JMD) - Average Annual Exchange Rate For 1 GBP	168.90	164.69	171.94	166.63	182.57

Source: World Bank - Latest available data.

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Latest Update: May 2024