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<TABLE class=story-top cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD colSpan=2><H1>Jamaica: Debt, Economic Performance and Labour </H1><SPAN class=byline>Friday, 8 September 2006, 11:53 am
Press Release: Council on Hemispheric Affairs</SPAN> </TD></TR></TBODY></TABLE><CENTER>
Council On Hemispheric Affairs
MONITORING POLITICAL, ECONOMIC AND DIPLOMATIC
ISSUES AFFECTING THE WESTERN HEMISPHERE
Wednesday, September 6th, 2006
Press Releases, Jamaica, Economic Report
</CENTER>
<H3>Jamaica: Debt, Economic Performance and Labour Productivity</H3>
• The Jamaican economy suffers from serious debt, high inflation and uneven growth rates
• Current economic policies, such as exchange rate devaluation and debt-servicing, only exacerbate Jamaica’s economic downslide
• To resolve this crisis, the government must implement measures aimed at sustainable growth, such as improving the quality of education and facilitating credit access for small borrowers
• Ultimately, Jamaica may be forced to walk the Argentine road of debt renunciation in order to keep from going under
Jamaica Faces a Somber Future
The Jamaican economy has suffered numerous challenges and setbacks in the increasingly competitive global environment. Ultimately, if Jamaica cannot solve its problems by conventional means, it may be persuaded to take the Argentine road of debt renunciation.
Since the 1960s, when the country enjoyed growth rates ranging from 2 percent to 8 percent per annum, the island has been unable to sustain high growth rates over an extended period of time. Jamaica continues to be vulnerable to falling prices and worldwide economic shocks, which have contributed to the pronounced fluctuating nature of its economy. The primary economic problems currently facing the Caribbean nation include high internal debt, a large trade deficit, swollen interest and inflation rates, chronically elevated unemployment levels, as well as low worker productivity, all of which fuel political unrest and escalating gang violence.
Traditionally, the Jamaican populace has blamed its political elites for the country’s poor economic performance. However, the position of the economy is attributable to more than just poor policy implementation on the part of national leaders. External factors also play a large role in its present parlous position. The oil crises of 1973-1974 and again in 1978-1979 significantly damaged the heavily petroleum-dependent state. During the 1970s and 1980s, both the Manley and Seaga administrations, in an attempt to revamp the economy and with the aid of international financial institutions, embarked on a programme of macroeconomic and structural reform, which focused on liberalizing the economy.
Since the 1980s, the government has undertaken the responsibility of limiting the state’s role in the economy, promoting the development of export driven production, reducing the fiscal and current account deficit, as well as eliminating poverty and inequality. Thus far, these objectives mostly have been met with limited success. The debt situation is alarming and continues to hamper economic growth by drawing heavily upon resources that could be put to more productive uses. The debt overhang also limits the extension of credit to the weaker margins of the private sector, particularly towards medium and small borrowers. In order to improve the economic situation, policies aimed at sustainable growth, such as a greater investment in education, have to be implemented to increase human capital and the labour force’s productivity.
The Economic Situation in Brief
Currently, the Jamaican economy is service-oriented and accounts for 60 percent of the island’s GDP (US $12.17 billion for fiscal year 2005). The primary sources of foreign exchange include remittances, tourism
Press Release: Council on Hemispheric Affairs</SPAN> </TD></TR></TBODY></TABLE><CENTER>
Council On Hemispheric Affairs
MONITORING POLITICAL, ECONOMIC AND DIPLOMATIC
ISSUES AFFECTING THE WESTERN HEMISPHERE
Wednesday, September 6th, 2006
Press Releases, Jamaica, Economic Report
</CENTER>
<H3>Jamaica: Debt, Economic Performance and Labour Productivity</H3>
• The Jamaican economy suffers from serious debt, high inflation and uneven growth rates
• Current economic policies, such as exchange rate devaluation and debt-servicing, only exacerbate Jamaica’s economic downslide
• To resolve this crisis, the government must implement measures aimed at sustainable growth, such as improving the quality of education and facilitating credit access for small borrowers
• Ultimately, Jamaica may be forced to walk the Argentine road of debt renunciation in order to keep from going under
Jamaica Faces a Somber Future
The Jamaican economy has suffered numerous challenges and setbacks in the increasingly competitive global environment. Ultimately, if Jamaica cannot solve its problems by conventional means, it may be persuaded to take the Argentine road of debt renunciation.
Since the 1960s, when the country enjoyed growth rates ranging from 2 percent to 8 percent per annum, the island has been unable to sustain high growth rates over an extended period of time. Jamaica continues to be vulnerable to falling prices and worldwide economic shocks, which have contributed to the pronounced fluctuating nature of its economy. The primary economic problems currently facing the Caribbean nation include high internal debt, a large trade deficit, swollen interest and inflation rates, chronically elevated unemployment levels, as well as low worker productivity, all of which fuel political unrest and escalating gang violence.
Traditionally, the Jamaican populace has blamed its political elites for the country’s poor economic performance. However, the position of the economy is attributable to more than just poor policy implementation on the part of national leaders. External factors also play a large role in its present parlous position. The oil crises of 1973-1974 and again in 1978-1979 significantly damaged the heavily petroleum-dependent state. During the 1970s and 1980s, both the Manley and Seaga administrations, in an attempt to revamp the economy and with the aid of international financial institutions, embarked on a programme of macroeconomic and structural reform, which focused on liberalizing the economy.
Since the 1980s, the government has undertaken the responsibility of limiting the state’s role in the economy, promoting the development of export driven production, reducing the fiscal and current account deficit, as well as eliminating poverty and inequality. Thus far, these objectives mostly have been met with limited success. The debt situation is alarming and continues to hamper economic growth by drawing heavily upon resources that could be put to more productive uses. The debt overhang also limits the extension of credit to the weaker margins of the private sector, particularly towards medium and small borrowers. In order to improve the economic situation, policies aimed at sustainable growth, such as a greater investment in education, have to be implemented to increase human capital and the labour force’s productivity.
The Economic Situation in Brief
Currently, the Jamaican economy is service-oriented and accounts for 60 percent of the island’s GDP (US $12.17 billion for fiscal year 2005). The primary sources of foreign exchange include remittances, tourism
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