IMF predicts weaker growth for Jamaica
Published:Wednesday | October 10, 2012 | 12:00 AM
The International Monetary Fund (IMF) predicts that Jamaica will grow at 0.9 per cent this year and 1.5 per cent by 2017, which slashes its previous forecasts roughly in half.
The projection highlighted in the World Economic Outlook (WEO) released Monday significantly trails the Latin America & Caribbean region at 3.2 per cent in 2012 and 4.0 per cent in 2017.
However, when disaggregated, Jamaica beats traditional Caribbean leaders Trinidad & Tobago and Barbados, both geared to grow at 0.7 per cent in 2012.
Haiti will lead the Caribbean at 4.5 per cent followed by its neighbour Dominica Republic at 4.0 per cent.
"In the Caribbean, high public debt and weak tourism and remittance flows continue to constrain the outlook, and growth is expected to remain lacklustre at about 2.75 to 3.5 per cent," stated the IMF in the report.
Panama leads Latin America with growth predicted at 8.5 per cent, while Paraguay trails the region with negative growth of 1.5 per cent.
The IMF has reduced Jamaica's 2012 growth prediction from 1.7 per cent to the current 0.9 per cent when WEO editions are compared year on year.
On September 24, a IMF mission visited Jamaica for two weeks of discussions over an IMF financing arrangement that agreed on a framework for negotiations of another bailout deal. Jamaica will next visit Washington to continue the negotiations.
Long-standing structural weaknesses
At the conclusion of the mission last week, Jan Kees Martijn, the fund's mission chief for Jamaica, said:
"Jamaica has long-standing structural weaknesses. A key challenge is how to attain higher and sustainable rates of economic growth, while reducing macroeconomic risks, including from the high public debt and high unemployment. Recent fiscal actions, anchored on the Fiscal Responsibility Framework, are a promising first step to address the cycle of low growth and high public debt."
Going forward, the Government and the IMF team agreed on the need for a medium-term economic programme that promotes growth and productivity.
Martijn said the plan needs to incorporate strong macroeconomic policies that, among other things, reflected a narrowing of the current account deficit and "strong" financial sector regulation and supervision.