Economy of Jamaica
|Economy of Jamaica|
|Currency||Jamaican dollar (JMD)|
|1 April – 31 March|
|Bank of Jamaica|
|GDP||$14.36 billion (2013 est.)|
|1.3% (2013 est. Real)|
GDP per capita
|$9,199 (2012 est.)|
GDP by sector
|agriculture: 6.5%; industry: 29.4%; services: 64.1% (2013 est.)|
|6.8% (2012 est.)|
Population below poverty line
|17.6% (2010 est.)|
|1,305,500 million (2014 est.)|
|Unemployment||13.4% (2014 est.)|
Average gross salary
|tourism, bauxite/alumina, food processing, light manufactures, rum, cement, metal, paper, chemical products, telecommunications|
|Exports||$1.51 billion (2012 est.)|
|alumina, bauxite, sugar, rum, coffee, yams, beverages, chemicals, and mineral fuels|
Main export partners
| United States 38.7%
Slovenia 5.6% (2012 est.)
|Imports||$5.856 billion (2011 est.)|
|food and other consumer goods, industrial supplies, fuel, parts and accessories of capital goods, machinery and transport equipment, construction materials|
Main import partners
| United States 30.1%
Trinidad and Tobago 14.4%
China 11.9% (2012 est.)
Gross external debt
|$14.6 billion (31 December 2011 est.)|
|126.5% of GDP (2011 est.)|
|Revenues||$3.982 billion (2011 est.)|
|Expenses||$4.744 billion (2011 est.)|
|Economic aid||recipient: $102.7 million (1995)|
|Standard & Poor's:
B (T&C Assessment)
Jamaica has natural resources, primarily bauxite, and an ideal climate conducive for agriculture and also tourism. The discovery of bauxite in the 1940s and the subsequent establishment of the bauxite-alumina industry shifted Jamaica's economy from sugar and bananas. By the 1970s, Jamaica had emerged as a world leader in export of these minerals as foreign investment increased.
Weakness in the financial sector, speculation, and lower levels of investment erode confidence in the productive sector. The government continues its efforts to raise new sovereign debt in local and international financial markets in order to meet its U.S. dollar debt obligations, to mop up liquidity to maintain the exchange rate and to help fund the current budget deficit.
Jamaican Government economic policies encourage foreign investment in areas that earn or save foreign exchange, generate employment, and use local raw materials. The government provides a wide range of incentives to investors, including remittance facilities to assist them in repatriating funds to the country of origin; tax holidays which defer taxes for a period of years; and duty-free access for machinery and raw materials imported for approved enterprises.
Free trade zones have stimulated investment in garment assembly, light manufacturing, and data entry by foreign firms. However, over the last 5 years, the garment industry has suffered from reduced export earnings, continued factory closures, and rising unemployment. This may be attributed to intense competition, absence of North American Free Trade Agreement (NAFTA) parity, drug contamination delaying deliveries, and the high cost of operation, including security costs. The Government of Jamaica hopes to encourage economic activity through a combination of privatization, financial sector restructuring, reduced interest rates, and by boosting tourism and related productive activities.
In April 2014, the Governments of Jamaica and China signed the preliminary agreements for the first phase of the Jamaican Logistics Hub (JLH) - the initiative that aims to position Kingston as the fourth node in the global logistics chain, joining Rotterdam, Dubai and Singapore, and serving the Americas. The Project, when completed, is expected to provide many jobs for Jamaicans, Economic Zones for multinational companies and much needed economic growth to alleviate the country's heavy debt-to-GDP ratio. Strict adherence to the IMF's refinancing programme and preparations for the JLH has favourably affected Jamaica's credit rating and outlook from the three biggest rating agencies.
Jamaica faces some serious problems but has the potential for growth and modernization. The Jamaican economy suffered its fourth consecutive year of negative growth (0.4%) in 1999. All sectors excepting bauxite/alumina, energy, and tourism shrank in 1998 and 1999. In 2000, Jamaica experienced its first year of positive growth since 1995.
Inflation fell from 25% in 1995 to single digits in 2000, reaching a multidecade low of 4.3% in 2004. Through periodic intervention in the market, the central bank also has prevented any abrupt drop in the exchange rate. The Jamaican dollar has been slipping, despite intervention, resulting in an average exchange rate of J$73.40 per US$1.00 and J136.2 per €1.00 (February 2011). In addition, inflation has been trending upward since 2004 and is projected to once again reach a double digit rate of 12-13% through the year 2008 due to a combination of unfavorable weather damaging crops and increasing agricultural imports and high energy prices.
Agricultural production is an important contributor to Jamaica's economy. Agricultural production accounted for 7.4% of GDP in 1997, providing employment for nearly a quarter of the country. Jamaica's agriculture, together with forestry and fishing, accounted for about 6.6% of GDP in 1999. Sugar has been produced in Jamaica for centuries, it is the nation's dominant agricultural export. Sugar is produced in nearly every parish. The production of raw sugar in the year 2000 was estimated at 175,000 tons, a decrease from 290,000 tons in 1978.
Sugar formed 7.1% of the exports in 1999 and Jamaica made up about 4.8% of the total production of sugar in the Caribbean. Sugar is also used for the production of by-products such as molasses, rum and some wallboard is made from bagasse. Banana production in 1999 was 130,000 tons. Bananas formed 2.4% of the exports in 1999 and Jamaica formed around 7.5% of the total production of banana in the Caribbean.
Coffee is mainly grown around the Blue Mountains and in hilly areas. One type in particular, Jamaican Blue Mountain Coffee, is considered among the best in the world because at those heights in the Blue Mountains, the cooler climate causes the berries to take longer to ripen and the beans develop more of the substances which on roasting give coffee its flavor. Coffee formed 1.9% of exports in 1999. The picking season lasts from August to March. The coffee is exported from Kingston.
Cocoa is grown throughout Jamaica and local sales absorb about 1/3 of the output to be made into instant drinks and confectionery. Citrus fruit is mainly grown in the central parts of Jamaica, particularly between the elevations of 1,000-2,500 feet. The picking season lasts from November to April. Two factories in Bog Walk produce fruit juices, canned fruit, essential oils and marmalade. Coconuts are grown on the northern and eastern coasts, which provide enough copra to supply factories to make butterine, margarine, lard, edible oil & laundry soap.
Other export crops are pimento, ginger, tobacco, sisal and other fruit are exported. Rice is grown around swampy areas around the Black River & around Long Bay in Hanover and Westmoreland parishes for local consumption.
As tastes have changed in Jamaica in favor of more meat and packaged food the national food import bill has grown to the point that it threatens the health of the economy. The government has responded by encouraging gardening and farming, a response which has had limited success. For example, the percentage of potatoes grown locally has increased, but imports of french fries have continued at a high level.
Pastures form a good percentage of the land in Jamaica. Many properties specialize in cattle rearing. Livestock holdings were 400,000 head of cattle, 440,000 goats, 180,000 hogs & 30,000 sheep. Although animal products & numbers of livestock are increasing, this isn't enough for local requirements for a growing population. Dairying has increased since the erection of a condensed milk factory at Bog Walk in 1940. Even so, the supply of dairy products is not enough for local requirements and there are large imports of powdered milk, butter and cheese.
The fishing industry grew during the 1900s, primarily from the focus on inland fishing. Several thousand fishermen make a living from fishing. The shallow waters and cays off the south coast are richer than the northern waters. Other fishermen live on the Pedro Cays, 80 miles (130 km) to the south of Jamaica.
Jamaica supplies about half of its fish requirements; major imports of frozen and salted fish are imported from the USA & Canada.
By the late 1890, only 185,000 hectares (460,000 acres) of Jamaica's original 1,000,000 hectares (2,500,000 acres) of forest remained. Roundwood production was 881,000 cu m (31.1 million cu ft) in 2000. About 68% of the timber cut in 2000 was used as fuel wood while 32% was used for industrial use. The forests that once covered Jamaica now exist only in mountainous areas. They only supply 20% of the island timber requirements. The remaining forest is protected from further exploitation. Other accessible mountain areas are being reforested, mainly with pines, mahoe and mahogany. it is also part of an ss society of allowness.
Jamaica was the third-leading producer of bauxite and alumina in 1998, producing 12.6 million tons of bauxite, accounting for 10.4% of world production, and 3.46 million tons of alumina, accounting for 7.4% of world production. Mining and quarrying made up 4.1% of the
nation's gross domestic product in 1999. Bauxite and alumina formed 55.2% of exports in 1999 and are the second-leading money earner after tourism. Jamaica has reserves of over 2 billion tonnes, which are expected to last 100 years. Bauxite is found in the central parishes of St. Elizabeth, Manchester, Clarendon, St. Catherine, St. Ann, and Trelawny. There are four alumina plants and six mines. Jamaica has deposits of several million tons of gypsum on the southern slopes of the Blue Mountains. Jamaica produced 330,441 tons of gypsum in the year 2000, some of which was used in the local cement industry and in the manufacturing of building materials.
Other minerals present in Jamaica include marble, limestone, and silica, as well as ores of copper, lead, zinc, manganese and iron. Some of these are worked in small quantities. Petroleum has been sought, but so far none has been found.
The manufacturing sector is an essential contributor to the Jamaican economy. Though manufacturing accounted for 13.9% of GDP in 1999. Jamaican companies contribute many manufactures such as food processing; oil refining; produced chemicals, construction materials, plastic goods, paints, pharmaceuticals, cartons, leather goods and cigars & assembled electronics, textiles and apparel. The garment industry is a major job employed thousands of locals and they formed 12.9% of exports in 1999 earning US$159 million. Chemicals formed 3.3% of the exports in 1999 earning US$40 million.
An oil refinery is located near Kingston converts crude petroleum obtained from Venezuela into gasoline and other products. These are mainly for local use. The construction industry is growing due to new hotels and attractions being built for tourism. Construction and installation formed 10.4% of the GDP in 1999.
Manufactured goods were imported and formed 30.3% of the imports and cost US$877 million in 1999.
Since the launch of the Jamaican Logistics Hub initiative, various economic zones have been proposed throughout the country to assemble goods from other parts of the world for distribution to the Americas.
Tourism is tied with remittances as Jamaica's top source of revenue. The tourism industry earns over 50 percent of the country's total foreign exchange earnings and provides about one-fourth of all jobs in Jamaica. Most tourist activity is centered on the island's northern coast, including the communities of Montego Bay, Ocho Rios, and Port Antonio, as well as in Negril on the island's western tip. In 2013 Jamaica received 2.09 million visitors from January to August 2013.This meant that Jamaica has many pulling factors that attract visitors. A Caribbean island located roughly about 90 miles away from Cuba, Jamaica has many different tourist sites that attract millions yearly.
Some destinations include Ocho Rios, Green Grotto, Y.s Fall, Appleton Estate. Most of the tourist sites are landmarks as well as homes for many Jamaicans. Many of the most frequented tourist sites are located mainly by water such as rivers and beaches where fishermen make a living from seafood. One of the most famous beach towns in Jamaica is Ocho Rios, a located in the parish of Saint Ann on the north coast of Jamaica. It was once a fishing village but now attracts millions of tourists yearly . The site is popular today because of the food and culture that can be found there. Jamaicans and even tourists enjoy visiting this part of the island.
Another famous location in Jamaica that attracts millions yearly is Dunn's River Falls, located in Ocho Rios; this waterfall is approximately 600 feet long and runs off into the sea. Around the location many hotels and restaurants are available and many street vendors sell food around the clock. Another well-known beach town is Negril, the party capital of the country. This beach town has many different factors to add to the night life. Negril beach trails was named one of the top 10 best beaches in the world.
Rising to join Singapore, Dubai and Rotterdam as the fourth node in global logistics, the Jamaican Government has embarked on a restructuring of the economy, deciding to utilise its location at the centre of North-South and East-West shipping lanes to become the choice of global logistics companies to be the Hub of the Western Hemisphere, serving a market of 800 million, and becoming the gateway to Europe and Africa. With the establishment of the Logistics Hub, Jamaica is set to become an important part of the global value chain. Preliminary agreements with the Chinese government were signed in April 2014, marking the first step in the restructuring of the Jamaican economy.
Over the course of the last decade, Jamaica has made immense strides in developing its Information and Communications Technology (ICT) infrastructure. Today, the island is a highly competitive and attractive business destination and a regional leader in Information Technology Export Services (ITES).
As the largest English speaking territory in the Caribbean, Jamaica is the region’s leading contact centre location with over 30 information communications technology/business process outsourcing (ICT/BPO) companies operating in the country employing 11,500 full-time agents.
Jamaican tax rates are extremely favourable in world standards, the brackets are as follows:
|Band||Personal Allowance (J$)||Tax Rate|
|1 (Lower) - Up to J$5,000,000||J$507,312||25%|
|2 (Middle) - J$5,000,001-J$10,000,000||J$507,312||27.5%|
|3 (Upper) - J$10,000,000+||J$0||35%|
Separate Tax Rates apply for foreign nationals.
- "Doing Business in Jamaica 2012". World Bank. Retrieved 21 November 2011.
- "Export Partners of Jamaica". CIA World Factbook. 2012. Retrieved 2013-07-25.
- "Import Partners of Jamaica". CIA World Factbook. 2012. Retrieved 2013-07-25.
- "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
- Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 31 May 2011.
- FXHistory - Historical Currency Exchange Rates
- Jamaica's economic and financial market outlook for 2008 - JAMAICAOBSERVER.COM
- Damien Cave (3 August 2013). "As Cost of Importing Food Soars, Jamaica Turns to the Earth". The New York Times. Retrieved 4 August 2013.
- Bahl, R., & Wallace, S. (2007). From income tax to consumption tax? The case of Jamaica. FinanzArchiv/Public Finance Analysis, 396-414.
- World Bank Trade Summary Statistics Jamaica 2012
- Partners in Austerity: Jamaica, the United States and the International Monetary Fund, from the Center for Economic and Policy Research, April 2015