Embed This Data
- GDP (PPP):
- $24.6 billion
- 1.1% growth
- 0.5% 5-year compound annual growth
- $8,759 per capita
- Inflation (CPI):
- FDI Inflow:
Jamaica’s economy depends heavily on tourism and other service sectors. The government has struggled with balancing the budget but has reduced its crippling debt to around 120 percent of GDP. Some structural reforms and cuts in fuel and electricity subsidies in the most recent budget show the government’s intent to improve its financial health.
Despite some reforms to make paying taxes easier for businesses, the government has increased stamp duty, property tax, property transfer tax, and education tax rates. Bureaucracy hinders the ability of investors and entrepreneurs to do business. Government corruption and crime also remain serious problems, undercutting the confidence and competitiveness of both businesses and individuals.
Jamaica gained full independence from the United Kingdom in 1962. Deteriorating economic conditions during the 1970s led to recurrent violence as rival gangs affiliated with the major political parties evolved into powerful and still active organized crime networks that are involved in international drug smuggling and money laundering. Prime Minister Andrew Holness’s center-left Jamaica Labour Party narrowly won election in February 2016. Once a major sugar producer, Jamaica is now a net sugar importer, and services account for more than 70 percent of GDP. Most foreign exchange comes from remittances, tourism, and bauxite. Agricultural production rebounded in 2016, primarily due to more favorable weather conditions.
The government has increased the percentage of land with clear title, but much remains to be done; squatters make up nearly 20 percent of the population. The inefficient legal system weakens the security of property rights and the rule of law. Long-standing ties between elected representatives and organized criminals allow some gangs to operate with impunity, contributing to high levels of corruption and crime.
Jamaica’s top individual and corporate income tax rates are 25 percent. Other taxes include a property transfer tax and a general consumption tax. The overall tax burden equals 25.5 percent of total domestic income. Government spending has amounted to 27.4 percent of total output (GDP) over the past three years, and budget deficits have averaged 0.3 percent of GDP. Public debt is equivalent to 124.3 percent of GDP.
The overall process for obtaining licenses and starting a business has been streamlined, and enforcement of the commercial code is relatively strong. The nonsalary cost of employing a worker is moderate, but dismissing an employee is costly. Regulations on work hours are flexible. In May 2016, the new government presented its first budget, which included significant cuts in subsidies for fuels and electricity.
Trade is important to Jamaica’s economy; the value of exports and imports taken together equals 77 percent of GDP. The average applied tariff rate is 7.3 percent. Jamaica is relatively open to foreign investment, but state-owned enterprises distort the economy. Restoring stability in the financial sector has enabled Jamaica to regain access to the international financial market, but high financing costs continue to hamper private-sector growth.