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- GDP (PPP):
- $25.2 billion
- 0.5% growth
- -0.7% 5-year compound annual growth
- $9,048 per capita
- Inflation (CPI):
- FDI Inflow:
Jamaica’s economic freedom score is 67.7, making its economy the 48th freest in the 2015 Index. Its score has increased by 1.0 point since last year, reflecting gains in five of the 10 economic freedoms, including freedom from corruption, fiscal freedom, and the management of government spending, that outweigh a decline in monetary freedom. Jamaica ranks 9th out of 29 countries in the South and Central America/Caribbean region.
Action to correct terms of trade issues and poor fiscal policy has helped Jamaica to improve its overall economic freedom score over the past five years. Since 2011, economic freedom on the island has improved by 2.0 points, led by advances in five of the 10 economic freedoms including freedom from corruption, the management of government spending, and fiscal freedom. In the 2015 Index, Jamaica has achieved its highest economic freedom score ever.
However, the foundations of economic freedom in Jamaica are still weak. Corruption is common, and the rule of law is weakly enforced. Violence related to the drug trade has been prevalent. Jamaica scores only about average on trade and financial freedom, a serious problem for an island nation dependent on imports for basic goods and fuel.
Prime Minister Portia Simpson-Miller’s People’s National Party was re-elected in December 2011 with a large parliamentary majority. Simpson-Miller has maintained market-friendly policies, but high interest rates and government debt burden the economy. A $1.27 billion standby agreement with the International Monetary Fund signed in 2010 required a commitment to major fiscal reforms that have been slow to materialize. An extended IMF agreement was approved in 2013. Most foreign exchange comes from remittances, tourism, and bauxite production, all of which declined sharply during the 2009 recession and have not recovered. Unemployment remains high, particularly in the formal sector. Services account for more than 60 percent of GDP. Jamaica is a member of the Venezuela-led Petrocaribe oil alliance.
Jamaicans see corruption as a root cause of their high crime rate. The government has yet to send a strong signal against corruption. In May 2014, a license to a Hong Kong–based company for a major power project was revoked amid allegations of improper handling of the tender process. The inefficient legal system weakens property rights and the rule of law.
Jamaica’s top individual income tax rate is 25 percent, and its corporate tax rate is down to 25 percent from 33.3 percent. Other taxes include a property transfer tax and a general consumption tax. Overall tax revenue equals 24.4 percent of domestic income. Government expenditures equal 29.9 percent of domestic production, and public debt is equivalent to 139 percent of gross domestic product.
With no minimum capital required, the business start-up process takes only two procedures. However, completing licensing requirements continues to be time-consuming, taking over four months on average. Inefficiencies in the labor market continue to cause chronically high unemployment and underemployment. Most prices are set by the market, but the government regulates the prices of several goods and services.
Jamaica’s average tariff rate is 7.5 percent. Tariffs are an important source of government revenue. Some imports require a license. The government does not automatically screen foreign investment. The banking sector is diversified, providing a wide range of financial services. Incorporating new provisions related to the evolving financial system, the Banking Services Act was approved in June 2014.