Economy of Jamaica

Jamaica has natural resources, primarily bauxite, and an ideal climate conducive to agriculture and 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.

The country 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. Nominal economic growth has continued to the upside approximately in line with US growth since. This is the result of the government's continued tight macroeconomic policies, which have been largely successful. 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. However, the Jamaican dollar has been slipping, despite intervention, resulting in an average exchange rate of J$73.40 per US$1.00 and J107.64 per €1.00 (May 2008). [ [http://www.oanda.com/convert/fxhistory FXHistory - Historical Currency Exchange Rates ] ] 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. [ [http://www.jamaicaobserver.com/magazines/Business/html/20080103T220000-0500_131002_OBS_JAMAICA_S_ECONOMIC_AND_FINANCIAL_MARKET_OUTLOOK_FOR_____.asp Jamaica's economic and financial market outlook for 2008 - JAMAICAOBSERVER.COM ] ]

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.

Primary industries

Agriculture

Jamaican agriculture, along with forestry and fishing accounts for about 6.6% of GDP in 1999. Sugar, the leading export crop, is produced in nearly all the parishes in Jamaica. Sugar production in 2000 was estimated at 175,000 tons, a decrease from 290,000 tons in 1999. Sugar formed 7.1% of the exports in 1999 & Jamaica formed 4.8% of production in the Caribbean. Sugar is also used for the production of by-products such as molasses, rum & some wallboard is made from bagasse. Banana production in 1999 was 130,000 tons. Bananas formed 2.4% of the exports in 1999 & Jamaica formed 7.5% of production in the Caribbean.

Coffee is mainly grown around the Blue Mountains and in hilly areas, where one type, 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 the 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 may Pen and Bog Walk produces fruit juices, canned fruit, essential oils & 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. Cannabis has also been one of Jamaica's leading economic assets. Over 15% percent of gross domestic product is contributed by this plant alone.

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.

Animal husbandry

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.

Fishing

The fishing industry grew during the 1980s, 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, convert|80|mi|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. The total catch in 2000 was 5,676 tons, a decrease from 11,458 tons in 1997; the catch was mainly marine, with freshwater carp, barbel, etc., crustaceans & molluscs. Catfish are responsible for over 4% of Jamaican inhabitants' deaths due to the deadly venom found on the tips of their dorsal and pectoral fins. However these deadly fish are considered a dilicacy among the Jamaican population, due to the high levels of vitamin B¹² which is found within the fatty tissue which is abundant in this fish.

Forestry

By the late 1980s, only 185,000 hectares (457,000 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.

Mining

Jamaica is the third-leading producer of bauxite and alumina in 1998, with 12.6 million tons of bauxite, accounting for 10.4% of world production & 3.46 million tons of alumina , accounting for 7.4% of world production. Mining and quarrying contributed 4.1% to GDP in 1999. Bauxite and alumina formed 55.2% of exports in 1999 and is the second-leading money earner after tourism. Jamaica has reserved of over 2 billion tonnes and is expected to last 100 years. Bauxite is found in the central parishes of St.Elizabeth, Manchester, Clarendon, St.Catherine, St.Ann & Trelawny. There are 4 alumina plants and 6 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 and some of this was used in the local cement industry and the manufacturing of building materials. Other minerals present in Jamaica include marble, limestone and silica and 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.

Industry

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 dollars. Chemicals formed 3.3% of the exports in 1999 earning US$40 million dollars.

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 dollars in 1999.

Tertiary industries

Tourism

Tourism is now the principal earner of foreign exchange which earns over $1 billion each year. The tourist economy employs hundred of thousands of Jamaicans in many occupations. Most tourist activity is centered on the northern coast of the island and in the communities of Montego Bay, Port Antonio and Kingston.

Financial services

Another service is the financial services industry. The 1990s saw a rapid expansion in banking, investment, and insurance services. In 1999, financial institutions formed 7.8% of the GDP in 1999. There are many banks such as Century National Bank, Scotia-Bank, Royal Bank of Canada and First Caribbean Int'l Bank.

Retail

The absence of large commercial centers, other than Kingston, Montego Bay and Ocho Rios has resulted in a poorly developed retail sector in Jamaica. While Kingston and Montego Bay are home to a number of retail stores, including American fast-food franchises such as Domino's, Pizza Hut & Dairy Queen and the majority of the towns in the interior of the country such as Mandeville, May Pen and Spanish Town have small shops, public markets, and temporary roadside stands.

tatistics

GDP: purchasing power parity - US$11.3 billion (2004 est.)
GDP - real growth rate: 1.9% (2004 est.)
GDP - per capita: purchasing power parity - US$4,100 (2004 est.)
GDP - composition by sector:
"agriculture:" 6.1%
"industry:" 32.7%
"services:" 61.3% (2004 est.)
Population below poverty line: 19.7% (2002 est.)
Household income or consumption by percentage share:
"lowest 10%:" 2.7%
"highest 10%:" 30.3% (2000)
Inflation rate (consumer prices): 9.4% (1999 est.)
Labor force: 1.14 million (2004)
Labor force - by occupation: services 63.4%, agriculture 20.1%, industry 16.6% (2003)
Unemployment rate: 15% (2004)
Budget:
"revenues:" $2.27 billion
"expenditures:" $3.66 billion, including capital expenditures of $1.265 billion (FY98/99 est.)
Industries: tourism, bauxite, textiles, food processing, light manufactures, rum, cement, metal, paper, chemical products.
Industrial production growth rate: NA%
Electricity - production: 6,386 GWh (1998)
Electricity - production by source:
"fossil fuel:" 92.7%
"hydro:" 2.21%
"nuclear:" 0%
"other:" 5.09% (1998)
Electricity - consumption: 5,939 GWh (1998)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Agriculture - products: sugarcane, bananas, coffee, citrus, potatoes, vegetables; poultry, goats, milk
Exports: $1.4 billion (f.o.b., 1999 est.)
Exports - commodities: alumina, bauxite, sugar, bananas, rum
Exports - partners: United States 39.5%, European Union (excluding UK) 15.6%, United Kingdom 12.1%, Canada 11.5% (1998)
Imports: $2.7 billion (f.o.b., 1999 est.)
Imports - commodities: machinery and transport equipment, construction materials, fuel, food, chemicals, fertilizers
Imports - partners: United States 50.9%, European Union (excluding UK) 9.5%, Caricom countries 10.4%, Latin America 6% (1998)
Debt - external: $3.8 billion (1998 est.)
Economic aid - recipient: $102.7 million (1995)
Currency: 1 Jamaican dollar (J$) = 100 cents
Exchange rates: Jamaican dollars (J$) per US$1 - 70.0 (December 2007) 62.5 (September 2005), 45.7 (June 2001), 41.139 (December 1999), 9.044 (1999), 36.550 (1998), 35.404 (1997), 37.120 (1996), 35.142 (1995)
Fiscal year: 1 April–31 March

:"See also :" Jamaica

References