Jamaica - Economic development



Since assuming office in 1992, Prime Minister Patterson has consolidated the market-oriented reforms initiated by his predecessor, Michael Manley, to make Jamaica a regional leader in economic reform. Patterson has eliminated most price controls, streamlined tax schedules, and privatized government enterprises. Tight monetary and fiscal policies under an International Monetary Fund (IMF) program have helped slow inflation and stabilize the exchange rate, but, as a result, economic growth has slowed and unemployment remains high. Jamaica's medium-term prospects depend largely on its ability to continue to attract foreign capital and limit speculation against the Jamaican dollar.

Inevitably, the contraction of economic output impacted adversely on the employment situation. The reduced performance of the traditionally labor-intensive apparel industry contributed significantly to rising unemployment as some 7,000 jobs, amounting to 25% of the employment in the industry, were lost. Along with job losses in the financial sector and other sectors, 1996 witnessed overall losses of employment amounting to 10% of the labor force and rising unemployment above the 20% mark. The unemployment rate was 16% in 2000. Problems in the financial sector continued in the new millennium, disturbing economic development.

Inflation fell from 25% in 1995 to 7% in 2001. Low levels of investment have hampered economic development. The government offers an extensive array of incentives to investors, however, including tax holidays and duty-free access for machinery and raw materials imported for certain enterprises. The government aims to encourage economic growth by stimulating growth in tourism, pursuing increased privatization, restructuring the financial sector, and lowering interest rates. The 11 September 2001 terrorist attacks on the United States and heavy floods that November and in May 2002 hurt the tourist industry in 2002–03. Government expenditures for tourist promotion, flood relief, and wages resulted in a less-thanexpected lowering of the public debt. In 2002, the public debt stood at 129% of GDP. The government's monetary policy was tight in 2002, to keep inflation in single digits. The government put forth efforts to fight crime, improve infrastructure, and strengthen the competitiveness of the economy.

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