Jamaica Economic Structure

 

 

The Jamaican economy is heavily dependent on the services segment, which contributes over 60% to the country’s total output. However, nearly 20% of the country’s manpower is still employed in the low productivity agricultural segment. Remittances from abroad contribute significantly to the country’s economy and account for nearly 20% of its GDP. The country’s economic growth has slowed down since the 1990s mainly due to destruction caused by natural calamities and Jamaica’s high level of public debt (130% of its GDP). The country’s high fiscal and trade deficits make it highly vulnerable to external shocks.[br] Jamaica has, however, made significant progress in reducing poverty in the last decade and is approaching the attainment of its Millennium Development goal of halving poverty by 2015.

 

Jamaica Economic Structure: GDP Growth and Reforms

 

Notwithstanding its huge growth potential, the Jamaican economy’s growth and output is hampered by its high level of public debt and the associated servicing costs that restrict investments. Jamaica’s GDP has been persistently low since several years, and declined from 2.7% in 2006 to1.4% in 2007 (because of the destruction caused by the hurricane Dean) before turning negative to 0.6% in 2008 due to the global economic crisis. In the year 2009, Jamaica recorded a real GDP growth of -4%.

 

In the past several years, the country’s government has introduced several reforms to encourage economic activity through a combination of privatization, financial sector restructuring and boosting tourism and related production activities. Hard hit by the global financial crisis of 2007-09, Jamaica is expected to receive $2.35 billion aid from the International Monetary Fund (IMF) and other international lending agencies. The proposed aid program calls for Jamaica to implement a fiscal consolidation strategy aimed at streamlining expenditure, reforming the public sector, and implementing a comprehensive debt management strategy to reduce the government’s interest costs thus allowing for investments in education and infrastructure.[br]

Jamaica Economic Structure: Contributors

Jamaica’s service segment, comprising tourism and related activities, is the major contributor to the economic growth and employs over 60% of the country’s population. The industrial segment is largely driven by its mining units and contributes over 30% to the country’s GDP while employing nearly 18% of its population. The country’s agriculture sector is the most unproductive, since it employs nearly 18% of its population and contributes only 5% to the GDP.