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2010 fiscal forecast flat

Published:Friday | April 9, 2010 | 12:00 AM

THE GOVERNMENT is aiming to reverse a 2.7 per cent contraction in the economy for calendar year 2009 but its forecast for 2010 is flat as it targets a 0.5 per cent gross domestic product (GDP) growth for the period.

Finance and Public Service Minister Audley Shaw yesterday said growth was expected to increase next year.

"This is expected to increase to two per cent in each year from 2011 to 2014," Shaw announced as he opened the 2010-2011 Budget Debate.

The initial fiscal deficit target of 5.5 per cent of GDP for 2009/2010 spiked to 8.7 per cent of GDP as set out in the First Supplementary Estimates tabled in September 2009. The need for adjustment was blamed on a significant shortfall in revenue flows and "higher expenditure outlay, arising from costs associated with higher-than-anticipated domestic interest payments due to the Jamaica Debt Exchange".

A further revision was made to the fiscal-deficit target under the IMF standby agreement to 9.6 per cent of GDP.

Unemployment increased from 10 per cent in 2008 to 11.6 per cent last year, an increase attributed to the fallout from the global recession.

Shaw said the unemployment trend would reverse as more jobs were created under the administration's economic recovery programme.