Jamaica - ECONOMY - Info

ECONOMY

Jamaica is a mixed, free-market economy with state enterprises as well as private sector businesses. Major sectors of the Jamaican economy include agriculture, mining, manufacturing, tourism and financial and insurance services. Tourism and mining are the leading foreign exchange earners. Supported by multilateral financial institutions, Jamaica has, since the early 1980's, sought to implement structural reforms aimed at fostering private sector activity and increasing the role of market forces in resource allocation. Since 1991, the Government has followed a program of economic liberalization and stabilization by removing exchange controls, floating the exchange rate, cutting tariffs, stabilizing the Jamaican currency, reducing inflation and removing restrictions on foreign investment. Emphasis has been placed on maintaining strict fiscal discipline, greater openness to trade and financial flows, market liberalization and reduction in the size of government. During this period, a large share of the economy was returned to private sector ownership through divestment and privatization programs. The macroeconomic stabilization program introduced in 1991, which focused on tight fiscal and monetary policies, has contributed to a controlled reduction in the rate of inflation. The annual inflation rate has decreased from a high of 80.2% in 1991 to 7.9% in 1998. inflation for FY1998/99 was 6.2% compared to 7.2% in the corresponding period in FY1997/98. The Government remains committed to lowering inflation, with a long-term objective of bringing it in line with that of its major trading partners. After a period of steady growth from 1985 to 1995, real GDP decreased by 1.8% and 2.4% in 1996 and 1997, respectively. The decrease in GDP in 1996 and 1997 was largely due to significant problems in the financial sector and, in 1997, a severe island-wide drought (the worst in 70 years) that drastically reduced agricultural production. In 1997, nominal GDP was approximately J$220,556.2 million (US$6,198.9 million based on the average annual exchange rate of the period). The economy in 1997 was marked by low levels of import growth, high levels of private capital inflows and relative stability in the foreign exchange market. Recent economic performance shows the Jamaican economy is recovering. Agricultural production, an important engine of growth increased 15.3% in third quarter of 1998 compared to the corresponding period in 1997, signaling the first positive growth rate in the sector since January 1997. Bauxite and alumina production increased 5.5% from January to December, 1998 compared to the corresponding period in 1997. January's bauxite production recorded a 7.1% increase relative to January 1998. Tourism, which is the largest foreign exchange earner, showed improvement as well. Growth in tourist arrivals accelerated in the third quarter of 1998 and tourism earnings, increased 8.5% from January to December 31, 1998 compared to the corresponding period in 1997.

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