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- GDP (PPP):
- $24.8 billion
- 1.5% growth
- -0.5% 5-year compound annual growth
- $9,029 per capita
- Inflation (CPI):
- FDI Inflow:
Jamaica’s economic freedom score is 66.8, making its economy the 52nd freest in the 2013 Index. Its score is 1.7 points higher than last year, reflecting much-needed improvement in the control of government spending as well as gains in monetary and trade freedom. Jamaica ranks 9th out of 29 countries in the South and Central America/Caribbean region.
Significantly burdensome government regulation and political favoritism are a drag on the Jamaican economy, and a cumbersome bureaucracy dissuades potential entrepreneurs. Pervasive corruption continues unchecked by anti-corruption measures that lack enforcement capacity. Continuing fiscal deficits have pushed public debt to about 140 percent of GDP, trapping Jamaica in a vicious cycle of debt service and borrowing, and the new government has not yet demonstrated the political will to tackle the tough reforms needed to eliminate the deficit.
Although a number of issues still plague the Jamaican economy, improvements have been made in some areas. Procedures for starting a business are more streamlined, and foreign investment is more welcome in many sectors. Property rights are recognized and protected, but their economic impact is limited by a slow-moving judiciary.
Prime Minister Portia Simpson Miller’s People’s National Party took office in January 2012 with a large parliamentary majority and is expected to maintain market-friendly policies. High interest rates and excessive government debt burden the economy. A USD$1.27 billion Standby Agreement with the International Monetary Fund for balance of payment support, signed in 2010, required major fiscal reforms that have been slow to materialize. Services account for more than 60 percent of GDP. Most foreign exchange comes from remittances, tourism, and bauxite, all of which declined sharply in the 2009 recession. Tourism receipts have recovered slightly. Unemployment and underemployment in the formal sector are high. Violent crime, fueled by the drug trade, is a serious problem.
Jamaica’s judiciary lacks adequate resources, and trials can be delayed for years. Bureaucracy can cause significant delays in securing land titles. Inadequate law enforcement and an inefficient legal framework weaken the security of property rights and the rule of law. Pervasive public corruption undermines efforts against drug trafficking, and widespread petty corruption and crime undermine economic development.
The top income tax rate is 25 percent, and the top corporate tax rate is 33.3 percent. Other taxes include a property transfer tax and a general consumption tax. The overall tax burden is equal to 22.7 percent of total domestic income. Government spending is equivalent to 32.8 percent of total domestic output. The deficit has moderated at 6.5 percent of GDP, and public debt greatly exceeds the size of the economy.
The business start-up process is straightforward, with no minimum capital required. However, obtaining necessary licenses still costs over 200 percent of the level of average annual income. Rigid employment regulations are not conducive to job growth. Although inflationary pressures have eased somewhat, the state continues to regulate the prices of a number of goods and services.
The trade-weighted average tariff rate is a relatively high 7.5 percent, and non-tariff barriers further constrain trade freedom. Jamaica officially encourages foreign investment, but the investment regime lacks transparency and efficiency. The financial system continues to grow, and the private sector has access to a wide range of credit instruments. Three large commercial banks dominate the banking sector, which remains relatively sound.