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Economy 2011 – Jamaica Year in Review 2011

Written by Cordella Lewis

The economy took center stage for much of 2011 as the entire world faced difficult economic conditions.

In January, the Jamaica Stock Exchange was ready to introduce an electronic trading system that allows real-time simultaneous tracking of stocks on the exchanges of Jamaica, Barbados, and Trinidad and Tobago. Investors in these regions will now be able to buy and sell equities directly, rather going through a settlement bank.

A number of financial experts recommended more financial education for Jamaicans. The Financial Services Commission urged people to become educated in financial matters and introduced a program of lessons designed for implementation in the schools. These lessons cover the rights and responsibilities involved with being knowledgeable consumers of financial services. Joseph M. Matalon, president of the Private Sector Organization of Jamaica (PSOJ), also stated that the government should create a public education program designed to inform citizens about the importance of paying their taxes. Matalon said that many Jamaicans are unaware of the critical nature of tax-related issues. In another tax-related matter, tax consultant and head of the Taxation Committee of the Institute of Chartered Accountants of Jamaica (ICAJ), Ethlyn Norton-Coke, encouraged the government’s tax reform committee to enlarge the tax base by including people who work in the informal economy in any reforms. Taxi drivers were cited as a good example of workers who make money, but do not pay their fair share of tax.

Poverty
Poverty remains a significant concern for Jamaica’s government and financial observers. According to the Planning Institute of Jamaica, the nation’s poverty level rose from 16.5 percent in 2009 to over 20 percent in 2010. In 2007, 9.9 percent of the population lived in poverty. A report from the Institute attributes the causes of poverty in Jamaica to fiscal stabilization measures, extreme weather conditions that existed in 2010, and civil unrest occurring in May 2011. Dr. Omar Davies, the Opposition spokesman on finance, said that the government did not include adequate measures to aid the poor and other vulnerable groups in its 2011-2012 budget. Current economic conditions require the government to provide a “reprieve” for Jamaicans, but there has been no move toward mitigating citizens’ financial burdens in the new budget.

And as if to concur with expert opinion and studies, the annual World Economic Forum Global Competitive Index for 2011 indicated that Jamaica had dropped 12 places in the ranking of 142 regional economies. Jamaica had a ranking of 107 among the142 nations included in the 2011 Index. The change in status was attributed to lack of physical security, poor infrastructure development, inefficient allocation of resources, and lagging innovation.

Growth
Once he took office, Jamaica’s new Prime Minister Andrew Holness established a government plan designed to emphasize public-private ventures that will drive economic expansion. Holness is not depending on public spending for growth, he said, but instead will work with companies in China, the United States, and Europe to increase investments in the island’s housing, roads, and water facilities sectors. Jamaica appears ready for growth, having shown an increase in the Gross Domestic Product of 1.5 percent over 2011, according to Michael Stern, Minister of State for Industry, Investment and Commerce. Douglas Orane, CEO of GraceKennedy, supported Stern’s optimistic view of the economy, citing the vibrant and growing nature of Jamaican entrepreneurship. Karl Samuda, Minister of Industry, Investment and Commerce, assured potential Canadian investors about the many opportunities for wealth creation in Jamaica at the JAMPRO “Invest in Jamaica” forum in Toronto. Samuda particularly cited Jamaica’s potential in trading and investment sectors like health and sports tourism, information technology, agriculture, and energy. Also touting Jamaica’s potential was Minister of Finance 

Audley Shaw, who invited the Chinese to increase their stake in the nation during a visit to China for meetings with government ministers there. Shaw affirmed his belief that Jamaica’s commitments to the International Monetary Fund would be met, noting that this was critical for the country’s continuing economic stability.

Audley Shaw, Jamaica’s Minister of Finance, was optimistic about the economic growth of the country, which he believed could exceed the targeted 2.5 percent estimate for 2011. Shaw said he is “optimistic”  because Jamaica continues to try to attract new investments in tourism and in information and communications technology. The government approved a law permitting the expansion of casinos in Jamaica as well, which he expects will give a boost to the economy.

However, Jamaica’s large amount of debt has a negative impact on local hospitals and schools. Both organizations have learned to make do with less because paying off the national debt remains a top priority for the government. Jamaica’s debt to creditors totals $18.2 billion, more than the entire production of the nation’s domestic economy for one year. This represents 132 percent of the Gross Domestic Product, according to the International Monetary Fund (IMF).

About the author

Cordella Lewis